Airline Lobbyists Changed Bailout Language To Create Loophole That Let Them Reduce Employee Pay

Despite taking CARES Act payroll protection subsidies from the federal government, airlines including Delta, United, and JetBlue have cut worker hours. This means that employees receive less pay, and airlines spend less on payroll, despite requirements not to furlough workers or reduce rates of pay through September 30.

American Airlines CEO Doug Parker said “I was there when we were working on CARES and that wasn’t the intent or meaning of it.” Parker is right, that wasn’t how the CARES Act was supposed to work. Politico has the original language,

provide employees with a guaranteed wage for every workweek that provides each employee continued payments in the amount of 100 percent of the employee’s full wages and for the employee’ total expected hours per workweek i the event that the employee is terminated, furloughed, experiences a reduction in work hours, or otherwie suffers any loss of such wages during such period;

This worker pay protection language was there and it was removed. I had previously suggested it was possible that merely inartful or rushed legislative drafting could have created the loophole that allowed airlines to reduce worker hours, and spend less on wages, even though they took CARES Act payroll subsidies.

I assumed that wasn’t the case – that the sausage got made with the airlines in the room, so it’s not surprising that they managed to get language allowing them to take the money and use some of it to put their shareholders in a better position. And this is the smoking gun. The language didn’t allow them to do this, and they got it changed. They knew exactly what they were doing.

Airline bailouts were sold on the basis that they fully protected workers at the airlines, not just just workers wouldn’t be laid off. Had airlines been transparent about the changes they would make after receiving the money it never would have passed.

(HT: @crucker)

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. We (and the government) should remember this when they (inevitably) come back begging for more taxpayer dollars

  2. Another reason lobbyists are considered by the public to be lower than Congress. Remember how it was the lobbyists for Big Pharma who spent only $250 Million to secure the Medicare Act of 2002 which denied Medicare discounted pricing while opening the spigot for the pharmaceutical industry to charge full retail pricing to Medicare.

    If Congress would ever get off its touchiss, cease their aimless “shoot, aim, ready” harassment, a real investigation should be immediately held in full transparency to reveal who on Capitol Hill-or in the White House-betrayed the public’s trust? We already know the airlines guilty of such self-serving actions are mere bottom ponders.

    If their is to be yet another airline bailout, Congress better ensure any amount manipulated to dilute the definition of full payroll to the guilty airlines is fully subtracted from any additional amount they receive.The IRS should tax every dollar the guilty airlines received that went towards stockholders. Amazing to see how AA’s Parker comes out here smelling like a rose.

    The way the mileage programs have been shredded into toilet paper, they are today far less value to the majority of flyers. That said, I doubt other than the stockholders, the public is in no mood to sacrifice its taxes to prevent any airline bankruptcy.

    When Truman was a senator before becoming FDR’s VP, Truman made it a habit to secretly observe military factories to call out fraud and waste. Sad how nobody succeeded in taking Truman’s place to look out for the public.

  3. So the airlines destroyed the entire premise upon which the money was handed to them. I was in favor of the first bailout but if the Big 3 come back for seconds they should get the brushoff. In fact, this is proof that lobbying needs much much more stringent rules. Unacceptable doesn’t begin to cover this.

  4. Even with the changed language Doug Parker at AA was still committed to the spirit of the bill, while others weren’t. Good on him and American Airlines.

  5. Why would you prefer airlines to waste more taxpayer money by keeping unnecessary workers on the clock 40 hrs a week? And why are airline workers more special than the 20M+ who recently lost their jobs?

  6. WR2,

    While I think most were opposed to the original bailout, how is it wasting more taxpayer money by giving it to the workers? The money’s already been granted.

    I’ll give you a simple analogy. If I give you $100, and tell you that money is for Joe, and you give him $80, what’s that called?

  7. Shocker! The administration lied.

    What else were people expecting? Oh, forgot, that COVID-19 was a hoax and just like the flu!

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