Last week United Airlines informed its Management & Administrative (M&A) work group of mandatory unpaid time off this summer. This week the carrier shared some additional details related to the plans and the news for these employees is grim.
The carrier, like most airlines, expects to emerge from the crisis as a smaller operation. It will take years to return to the 2019 levels of passenger demand. And that means fewer staff to support the shrunken airline. But how it gets there is proving an interesting journey.
A four-day work week
Two key provisions in the new employee policies have employees irked. One is a reduction to a four-day work week for full-time employees. These workers are generally paid a salary rather than clocking in and out each day. They were hired based on an annual pay basis, not an hourly rate. And they often work far more than 40 hours per week without being compensated for the overage.
And now they will be paid for one fewer day each week.
One employee who spoke with PaxEx.Aero reiterated multiple times the disconnect in suddenly being seen as an hourly employee, “Management employees like me, we never punch in… Never in my over 20 year career my job has been explained in terms of hourly. Not only me, for none of my friends and colleagues…this is just not done.” But United is doing it now, even though they appear to qualify as salaried, exempt employees under the Fair Labor Standards Act.
While the company is moving to reduce employee hours it is also making that process less friendly than is absolutely necessary. Rather than allowing employees to use unpaid days consecutively, or even to book-end a weekend, the company indicates it “cannot offer the option to string unpaid days off together.” Instead, United recommends that the employees take additional vacation days if they want consecutive days out of the office.
Also of note, stringing the unpaid days together is more likely to allow the employees to qualify for unemployment insurance payouts during those times. For many of United’s M&A staff the 4-day work week means they are unlikely eligible for those benefits.
Forced vacation days
Moreover, the company is forcing employees to take half their accrued vacation time between now and the end of September. The internal memo indicates that this is to ensure everyone is able to take all their days rather than having too many requests come in at the end of the year. That same employee also rightfully observes that the move helps the company to reduce any future payout liability in case those employees are terminated.
And taking that time off is very important for the employees this Summer, according to the company:
I recognize that it seems strange to consider taking days off when many of us are under shelter-in-place orders and most would prefer to wait until we can get out with friends and family or travel the world. But especially now, unplugging from work is important.
Voluntary separation: The ultimate goal
In both the initial memo last week and the more recent FAQ the goal for United appears clear: The company wants more employees to pursue the voluntary separation program (VSP).
I have to ask each of you to seriously consider if choosing a voluntary separation with a robust benefits package might be right for you. The details of the program are being finalized and will be announced in mid-May for the domestic M&A team. If you participate in the Voluntary Separation Program, you will have the opportunity to maintain active pass travel privileges and medical benefits for an extended period of time, along with some continuation of pay.
The carrier is offering several inducements to help drive employees to this decision. Those choosing the VSP will be paid out any pending vacation in full, for example, while those laid off on 1 October would only be paid out at 75% according to the company’s plans. United also indicated that it will not offer any severance payout for employees terminated in October, “in these times, ensuring United’s future recovery means we have to take this option off the table.”
As part of pushing employees to make that decision, cutting their pay over the summer is also in play.
United also indicated to employees that it would not contest any unemployment insurance claims filed by those pursuing the VSP option. Typically an employee is not eligible for unemployment if they depart voluntarily. Some states do, however, allow claims where the overall reduction in force is announced in advance. Where it is available this benefit could be valuable to employees, but the company is not providing specific advice to workers on which states would pay out.
CARES Act compliance questioned
When the news first came out it also affected some 15,000 union employees. That group filed a lawsuit objecting to the unilateral action, at which point the company backed down, making it voluntary. But for the M&A staff the mandate remains. And the company insists it is only reducing hours, not cutting pay rates, to remain compliant with the CARES Act funding grants.
The CARES Act protects employees against layoffs and pay rate reductions through September 30. However, the assistance we’ve received only covers a part of our payroll costs. Governmental restrictions on travel, stay-at-home orders, and the lack of a medical solution for COVID-19 have brought bookings and demand for travel basically to zero. This is forcing us to come to terms with the fact that our airline – and our entire workforce – will have to be smaller than it is today, and it’s requiring us to continue taking decisive actions. That means reviewing and revising employee schedules, which is permissible by the CARES Act.
Perhaps United is correct in interpreting the CARES Act this way. But based on the variety of responses in the past week it is almost certain that was not the intent of the Act. And while the Unions managed to fight back the M&A staff appear poised to lose significantly. Even though they’ve never really been treated as hourly employees.
That the company must emerge smaller is hard to argue. Passenger count will be down. Fleet size (and likely types) will be down. Revenues will be down. The workload will be reduced and so staffing must follow.
But those cuts were not supposed to arrive until 1 October. United’s decision to effect them early, even if in compliance with the letter of the law, certainly appears in violation of the spirit of the CARES Act.