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United Airlines Prepares to Cut Pay for Thousands of Employees in Half But Claims its CARES Act Compliant

United Airlines Prepares to Cut Pay for Thousands of Employees in Half But Claims its CARES Act Compliant

A union has threatened to sue United Airlines after executives decided it will place thousands of its employees on part-time hours, effectively cutting their pay by 50 per cent. United Airlines has received a government bailout of around $5 billion to cover payroll expenses through September 30 under the Coronavirus Aid, Relief, and Economic Security (CARES) Act but believes more needs to be done to reduce costs.

The decision will affect all full-time Airport Operations employee including baggage handlers, customer service agents and reservations agents and will take effect from May 24. United Airlines told staffers that the measures were necessary in spite of the CARES Act support and was fully compliant with the law.

Photo Credit: United Airlines

“Even with a federal government grant that covers a portion of our payroll expense through September 30, we anticipate spending BILLIONS of dollars more than we take in for the next several months, while continuing to employ 100% of our workforce. That’s not sustainable for any company and that’s why we are making difficult decisions across our entire business,” explained Gregg Hart, United’s Chief Operating Officer in a memo sent to staffers on Friday.

“While our contract allows for a reduction of full-time employees all the way to 20 hours, we will commit to an equivalent number of 30 hour bid lines. We are making similar changes for our management personnel and those changes will be announced Monday,” Hart continued in the leaked memo.

Hart insisted that the measures were in “full compliance” with the requirements of the CARES Act and follows similar measures intr\oduced by both Delta Air Lines and jetBlue who will reduce the working hours for several employees groups over the coming months. So long as the airline’s do not lay-off any of their workers they should remain in compliance.

The International Association of Machinists & Aerospace Workers, however, disagrees with that assessment and has pledged to fight United’s decision. IAM District 141 says it will sue United in federal court because it believes moving employees to part-time hours against their will is a breach of the CARES Act.

“Instead of following the rules of the CARES Act, United is engaging in shaky lawyering, looking for legal loopholes instead of exhibiting leadership and integrity,” said Mike Klemm of IAM District 141.

“If we are forced to have a fight, we WILL fight,” he continued.

Klemm suggested that the IAM will argue that involuntarily putting people onto a part-time contract would be akin to furloughing employees – an act that is forbidden by the CARES Act. He claims the union put forward a number of alternative cost-saving plans but were rebuffed at the airline.

On Friday, United Airlines announced a loss of $1.7 billion for the first quarter and expects cash burn to remain at between $40 million and $45 per day during the second quarter. The airline has openly said that thousands of job might be cut as soon as the CARES Act funding runs out in October.

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