Electric vehicle manufacturer Tesla, founded by billionaire Elon Musk, is facing a proposed class-action lawsuit alleging that the company systematically discriminates against U.S. citizens in its hiring and firing practices, favoring H-1B visa holders to cut labor costs.

The lawsuit, filed on Friday in a San Francisco federal court, was initiated by software engineer Scott Taub and human resources specialist Sofia Brander, both U.S. citizens who claim they were denied employment at Tesla after the company learned they did not require visa sponsorship. The suit alleges that this practice is a violation of federal civil rights laws, Reuters reports.

The news agency said Tesla did not respond to its request for comment.

The proposed class action aims to represent all U.S. citizens who were either rejected for employment or were terminated by Tesla. The plaintiffs are seeking compensation for the affected group. If the case is certified, it could involve a substantial number of individuals.

According to the legal filing, Tesla’s preference for H-1B workers disproportionately harms American citizens, particularly in highly skilled roles.

“While visa workers make up just a fraction of the United States labor market, Tesla prefers to hire these candidates over U.S. citizens, as it can pay visa-dependent employees less than American employees performing the same work, a practice in the industry known as ‘wage theft,'” the complaint says.

Mr. Taub alleges that he was explicitly told one position was “H-1B only” and was subsequently excluded from consideration for another role. Ms. Brander, who previously worked for Tesla as a contractor, claims she was denied interviews for two positions despite her direct experience with the company.

The suit points to Tesla’s hiring data, noting that the company brought on approximately 1,355 H-1B workers in 2024 while simultaneously laying off more than 6,000 U.S.-based employees.

The complaint also references a social media post from Mr. Musk on December 27, 2024. The billionaire, a naturalized U.S. citizen from South Africa, described the H-1B visa program as “critical” for himself and key employees at his companies, including Tesla and SpaceX.