California’s Civil Rights Department sued Tesla in 2022, after roughly three years of investigating the company’s Fremont factory. Its analysis of pay data from June 2018 through June 2024 found Black workers earned $1,533 less per month than white workers. Workers, supervisors, and managers alike called the plant the “plantation,” according to the state’s filing. Black workers were called “slaves.”
An Alameda County judge rejected Tesla’s bid to toss the case in May 2026. A jury should decide whether the company is liable for systemic anti-Black harassment, discrimination, and retaliation, the court held, and set trial for July 20.
“Tesla claims to be built on the promise of creating a more sustainable future,” said CRD Director Kevin Kish. “But its employment practices remain rooted in some of the ugliest relics of the past. Black workers are paid less for their work. They are subjected to racist slurs. They face threats of being fired for speaking out.”
Tesla has called the lawsuit misguided and unfair. A 2022 company blog post said it strongly opposes all forms of discrimination and harassment.
Black professionals contributing to a workplace retirement plan almost certainly hold the stock. Their paychecks help fund the company.
The Employer Picks the Fund, and Almost Everyone Keeps It
The share of 401(k) participants offered target-date funds climbed from 42 percent in 2006 to 84 percent in 2020, according to the Government Accountability Office, the federal agency that audits government spending. Automatic enrollment pushed most participants into holding those funds solely or primarily. They now hold more than a quarter of all 401(k) assets.
Employers told GAO they pick these funds as the default because they’re cheap, diversified, and work as a set-it-and-forget-it option.
Researchers at the Employee Benefit Research Institute followed 700,000 participants. Most who were fully invested in target-date funds in 2016 were still fully invested through 2022. Among workers with two or fewer years on the job, 65 percent held them in 2019.
A fund chosen by an employer, entered by default, held for a decade.
One Fund, Thousands of Companies, No Screen
A target-date fund holds other funds. Those track broad indexes, and broad indexes weight companies by market value. A company enters because it’s large and publicly traded. Conduct doesn’t factor in. Neither does community impact.
Tesla sits in every total-market and large-cap U.S. index fund. So does Palantir Technologies, which joined the S&P 500 in 2024 and now ranks among the twenty most valuable U.S. companies.
Palantir built ImmigrationOS for Immigration and Customs Enforcement under a $30 million contract signed in April 2025. The system gives near-real-time visibility into people’s movements and helps select and apprehend them for deportation. The American Civil Liberties Union reported that the funding was folded into a sole-source case-management deal now past $145 million. Those systems pull from passport records, Social Security files, tax data, and license-plate readers, according to the American Immigration Council. The databases sweep in citizens and mixed-status families alongside their targets.
Amnesty International raised human-rights concerns about the ICE contracts back at the company’s 2020 listing. Palantir says its work is with the criminal investigative division and doesn’t facilitate civil immigration enforcement.
No retirement saver picked either company. Index eligibility put both in the portfolio, and payroll deductions keep buying more of them every two weeks.
Owning the Shares Without Casting the Vote
Mutual funds and index funds vote portfolio company shares on behalf of the investors in the fund. Asset managers cast the ballots on racial-equity audits, political spending disclosure, labor practices, and civil-rights risk. Some managers have added voting-choice programs. Coverage varies, and most 401(k) participants can’t vote company by company.
Black workers’ retirement contributions help finance a company their own state civil rights agency is taking to trial over how it treats Black workers. When shareholders vote on racial-equity audits at that company, those workers don’t get a ballot. Their asset manager does.
The Federal Guidance for Participants Hasn’t Been Updated Since 2010
GAO recommended in March 2024 that the Labor Department refresh two documents: its 2013 guidance for employers and its 2010 investor bulletin for participants. Both predate the shift toward collective investment trusts. The department disagreed. In April 2026, Labor officials told GAO they can’t implement the recommendations, citing competing priorities and limited resources.
The government’s own explainer for workers trying to understand what a target-date fund holds is sixteen years old. Nobody is updating it.
Participants are entitled to plan and investment information, including fee and performance disclosures, and can request the documents showing what a default fund holds. A fund’s holdings page lists the underlying positions. The Securities and Exchange Commission has warned that two target-date funds sharing the same year can carry different asset mixes. The name on the fund reveals nothing about what’s inside.
What Black Households Have Riding on This
Federal Reserve researchers found 65 percent of white families held retirement accounts in 2019, against 44 percent of Black families. Black households made up 13.6 percent of U.S. households in 2021 while holding 4.7 percent of household wealth, according to the Census Bureau. A 2026 Federal Reserve paper found racial gaps in comprehensive wealth persist among college-educated households, where salaries have done their work and inherited capital hasn’t.
Fewer accounts, holding a smaller share of national wealth. Every dollar in the ones that exist is doing more work, which is why what those dollars buy matters more here than almost anywhere else.
Screening Out a Company Costs Something, and Buys Less Than It Appears To
Walking away from a broad default carries a cost, and the cost is real. These funds cut single-company concentration, rebalance without prompting, and keep participants from timing mistakes. Trading that for a narrow screened portfolio raises volatility and concentration risk. Researchers at the NYU Stern Center for Sustainable Business found that results for values-screened investing turn on the screens, the fees, and the period measured. The evidence supports no blanket claim either way.
Fees compound. Screened funds usually cost more than broad institutional index options, and a small annual gap works against a balance across thirty years.
Labels also mislead. Funds carrying environmental or social labels use inconsistent methods, the SEC has cautioned, so one can exclude an industry and still hold companies a worker objects to for other reasons. Selling out of a company changes what a portfolio holds. It doesn’t move capital toward Black-owned businesses or Black neighborhoods. That runs through deposits, bonds, private funds, and direct investment.
Gallup found 44 percent of working investors would consider a social-impact fund in a 401(k), while 74 percent knew little or nothing about how such funds work.
The Plan Menu Is Where the Leverage Sits
Federal rules let fiduciaries weigh participant preferences in some menu-design and tie-breaking situations, as long as the choice holds up on prudence and loyalty grounds. Preferences aren’t legally irrelevant to a plan lineup. They work inside a financial-benefit framework. The argument that reaches a benefits committee is about the lineup and its costs.
Labor Department guidance describes an ongoing fiduciary duty to monitor and review plan investments. That makes the benefits committee a standing audience for questions about what the default holds and what alternatives cost.
One worker rebalancing an account changes one account. A menu change reaches everyone who never opts out.
For plenty of participants the broad default will still be the right holding once the fees and the alternatives are compared. That conclusion is worth reaching on purpose. Right now most people are holding these companies without knowing it, which is not the same thing as deciding to.
