(Bloomberg) -- A Tesla Inc. confidentiality document that’s facing a legal challenge by the National Labor Relations Board originated as a response to several leaks of internal information to news organizations two years ago, an executive testified Wednesday.
“September 2016, we kind of had this bubbling up of many leaks,” Jonathan Chang, Tesla’s legal vice president, said during an NLRB trial in Oakland, California. “You have another leak, and you’re like, ‘Jeez, another one?’”
Chang said that Tesla’s general counsel asked him to draft a confidentiality acknowledgment document “to remind our employees what their obligations are, and have them renew their vows.”
A labor board judge in Oakland is considering allegations by a regional director of the agency that Tesla has violated federal labor law, including by retaliating against union supporters, restricting employees’ pro-union activism and maintaining a confidentiality policy that infringes on workers’ rights. Tesla has said all the allegations are false.
Chang testified that articles by Bloomberg News and CNN in the fall of 2016, which quoted from emails Chief Executive Officer Elon Musk sent to all staff, helped precipitate the drafting and circulation of the confidentiality document.
Leaks can harm Tesla in a myriad of ways, including by causing customers to delay purchases in expectation that new features are forthcoming, or by spoiling the company’s plans to roll out new advances with a “big bang,” Chang said. They also can cause “significant SEC concerns” regarding how material information is disclosed, Chang said.
Tesla’s efforts to identify leakers have included following the “technical trail” of messages, such as metadata, Chang said. While these attempts have been unsuccessful in most cases, the company has at times been able to pin down the sources of leaks and had them criminally prosecuted, he said.
Chang described Tesla as an “incredibly transparent” company. When asked under cross-examination why Tesla shares confidential information -- including with respect to its financial position -- with all employees, Chang said that “the culture of Tesla is one of family, and trust of employees.”
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