TSMC's US Operations Threatened With Employee Discrimination Class Action

Updated Taiwan Semiconductor Manufacturing Company (TSMC) has been accused of “pervasive discrimination” against some of its workers in the USA.

A similar accusation was levelled in August by a single former HR staffer at TSMC North America. An amended complaint [PDF] filed last week saw another 12 additional current and former employees at TSMC's operations in California and Arizona seek to join a putative class action to explore the matter.

The plaintiffs, most of them of European, African, or Latino descent, work in roles of varying seniority and focus at TSMC's American subsidiaries.

Their complaint alleges that TSMC’s employment practices include an “intentional pattern and practice of employment discrimination against individuals who are not of East Asian race, not of Taiwanese or Chinese national origin, and who are not citizens of Taiwan or China, including discrimination in hiring, staffing, promotion, and retention/termination decisions.”

"TSMC routinely subjects non-East Asians (including those who are not of Taiwanese or Chinese descent) to a hostile work environment where verbal abuse, gaslighting, isolation, and humiliation is common, and oftentimes leads to the constructive discharge of these employees," the complaint claims.

Three alleged forms of discrimination

TSMC allegedly discriminates against some employees in three ways, the lawsuit asserts.

First, the company allegedly prefers to hire East Asians, Taiwanese, and Chinese nationals, even going as far as supplying US-based HR teams with resumes of preferred Taiwanese/Chinese candidates who already have permission to work in the US.

"The US HR team then simply hires these Taiwanese/Chinese candidates without question, even if no open roles have been posted in the US," the complaint alleges. Job postings reportedly often list Mandarin/Chinese as a preferred qualification despite TSMC officially conducting business in English and not requiring additional language skills.

That leads directly to the second assertion in the suit, namely that non-Asian employees and non-Taiwanese citizens "are frequently denied opportunities to advance and succeed at TSMC."

One example of such practices is conducting some internal discussions in Mandarin, and routinely writing documents in Chinese – leaving some staffers unable to participate or learn skills.

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"A related practice was acknowledged in the Q3 2023 US HR quarterly all-hands meeting by Jen Kung, head of compensation, who casually commented on the use of 'Chenglish' when Asians wanted to limit information being shared with non-Asians and/or to try to confuse them," the complaint claims.

Plaintiff stories in the lawsuit describe multiple instances of such, with training documentation only provided in Chinese to American employees who only speak English, insults and comments about Americans being lazy and bad employees, and retaliation for complaints about poor treatment.

Third, the complaint alleges that poor treatment of non-Taiwanese and non-Asian employees leads to them being "either terminated or constructively discharged at much higher rates than their East Asian counterparts," and that Taiwanese employees are frequently brought to the US to replace them after termination.

"Since 2022, TSMC Arizona and TSMC North America have removed the majority of non-East Asian managers and leaders hired by the subsidiaries and replaced them with East Asian employees, maintaining non-East Asians in management roles primarily only in a select number of customer - or public-facing positions," the suit claims.

TSMC asserts otherwise

"TSMC believes strongly in the value of a diverse workforce and we hire and promote without regard to gender, religion, race, nationality, or political affiliation because we respect differences, and believe that equal employment opportunities strengthen our competitiveness," TSMC told The Register. "We also provide various channels for employees to raise concerns, and strive to address any concerns constructively."

At the time of writing the company hasn't responded to the complaints. A federal district court in northern California has set a deadline of December 13 for a response.

We note that the complaint alleges at least one instance of an employee reporting complaints to their supervisors, and through an internal whistleblower website. According to the complaint, those raised concerns were ignored, and the employees reporting them allege a pattern of retaliation after making their complaints.

The plaintiffs in the eight-count lawsuit are attempting to obtain class status for "all non-East Asian, non-Taiwanese, and non-Chinese individuals" who applied to work with or worked with an American TSMC subsidiary. If successful in filing a class action, the plaintiffs hope to win monetary damages and structural changes at the company. A jury trial has been demanded. ®

Updated to add on November 14:

When asked whether he thought the visa situation could change to curb the sort of abuses that allow TSMC to prioritize foreign workers for jobs in the United States, Daniel Low, a lawyer representing the plaintiffs in the case, told us that it's unlikely, as no President has done much in recent decades to curb abuse of the H-1B visa program - including Trump, he asserted. "Major corporations have benefited from this abuse, and labor has suffered," Low told us in an emailed statement. "As long as the federal government does not enforce laws, an overhaul of the system would make no difference. Laws are only meaningful if they're enforced."