Has JetBlue just found a workaround to one of the fundamental clauses of the CARES Act?
In this post:
The basics of the CARES Act
With the CARES Act, US airlines are receiving nearly $50 billion in aid, split between payroll protection and loans. In exchange for accepting this aid, airlines had to agree to some conditions, including:
- Refraining from imposing involuntary furloughs on US-based employees or reducing employee pay or benefits through September 30
- Continuation of service as is reasonable and practicable under Department of Transportation regulations
- Maintaining certain limitations on executive compensation through March 24, 2022
- Suspending the payment of dividends or other distributions and cease stock buybacks through September 30, 2021
Is the CARES Act working as intended?
As I’ve said from the beginning, while I generally support airlines getting some assistance, the actual requirements they created seem silly:
- Airlines aren’t allowed to furlough people or reduce pay through September 30, so United has made it clear that they will be firing people on October 1
- Airlines are required to maintain service, though in the days since the CARES Act passed we’ve seen so many requests with the DOT for reductions in service in light of reduced demand
To be clear, I don’t fault airlines for this, I just feel like the government set the wrong goalposts for airlines.
JetBlue forcing staff to take time off
Airlines have been using a variety of methods to reduce their payroll expenses that work within the foundation of the CARES Act, including:
- Asking employees to take voluntary time off, either paid or unpaid
- Giving employees minimum hours within their contract guidelines
JetBlue has just announced a scheme that has me scratching my head a bit more than others. The airline has informed support and salaried frontline employees that they’ll have to take 24 days of unpaid time off between now and September 30, 2020. Per the memo to employees:
For all support Crewmembers and salaried frontline Crewmembers, we are launching a program to temporarily implement mandatory unpaid time off. You will be required to take 24 days of unpaid time off (UTO) between April 20 and September 30, 2020.
In other words, employees are being forced to take the equivalent of five weeks off over the course of about five months.
Is this a CARES Act workaround?
When I first saw this it sure seemed to me like a CARES Act violation. But that doesn’t seem to be the case.
The CARES Act requires airlines to not:
- Impose involuntary furloughs
- Reduce employee pay
- Reduce employee benefits
In FAQs for employees, JetBlue specifically addresses how this unpaid time off initiative works in light of the CARES Act:
How does this UTO initiative work in light of the CARES Act stipulation preventing involuntary furloughs or reduced pay rates?
Any airline that accepts the payroll support funds agrees to not involuntarily furlough or reduce pay rates for Crewmembers through September 30, 2020. That said, with much less work and less flying, the reality is that we still have much lighter work schedules. Through this UTO initiative, we are reducing work schedules across the company, which is in line with guidance outlined by the CARES Act.
Technically I suppose JetBlue isn’t violating the CARES Act here — they’re not furloughing or directly reducing pay here, but rather are reducing pay in the form of unpaid time off.
One has to wonder how far airlines could take this in the context of the CARES Act. Could an airline require employees to take three months of unpaid time off without violating the CARES Act?
In my opinion there’s a significant distinction between offering employees their standard fewest contractually agreed upon hours, and forcing unpaid time off.
In fairness, I of course recognize airlines are in a bind here. This isn’t an act of greed, or anything, but rather is JetBlue management trying to fight for survival. The airline is doing everything they can to conserve cash.
I’m curious to see if other airlines get creative with ways to further cut payroll while technically adhering to the CARES Act…
https://www.cnbc.com/2020/10/02/pelosi-vows-more-support-for-airlines-asks-carriers-to-hold-off-on-furloughs.html
Claiming aid part of 2nd comprehensive act or airline focused standalone.
not true........ one of friends told me and he is on H1B at jetblue, and he is not required to take the mandatory 24 unpaid days like everyone else at the company.
Unless a pilot comes out of the military the cost to become one isn't pocket change. Up to $200k with airtime. A highly perishable occupation if not used. The time, testing, and knowledge to get to that position and then hope for an interview... How would you like to take a commercial flight down the road with a pilot that has been grounded for several years? Totally out of practice.
Most airline companies are losing...
Unless a pilot comes out of the military the cost to become one isn't pocket change. Up to $200k with airtime. A highly perishable occupation if not used. The time, testing, and knowledge to get to that position and then hope for an interview... How would you like to take a commercial flight down the road with a pilot that has been grounded for several years? Totally out of practice.
Most airline companies are losing up to $100 million a day. It's not about the corporate shareholders or salaried executives who are taking a pay cut. They all want to keep the employees they have invested a lot of money into, without them they don't have a company. Maybe Delta and JetBlue will merge. Delta and DeltaBlue. JB is a well-run company that treats their employees well.
@UAemployed, maybe your position is not affected. I have UAL friend in a leader role (Sup or Manager) at ORD who was pressured to commit to regular UTO days (one per week or every two weeks, I forget the frequency).
@Yashira what workgroup are you? I can tell you most LSC and OSC are NOT happy. This does not even apply to anyone that is not salaried. So speak for yourself and your own workgroup.
@All maybe you would know the proper way to write "jetBlue" if you really worked for JetBlue. Everything Lucky wrote about is true for full-timers.
This article is misleading. Jetblue is treating us employees with respect and dignity. Do your research better. I love my employer I love my options. I feel greatful. And most employees feel the same way. This article makes me mad.
Most people commenting about it don't realize that we CAN apply for unemployment if our hours have been involuntarily reduced. It may vary by state, but we can. I did the moment they told us about the UTO. We just tell workforce services that we've had reduced hours due to COVID-19.
@prognosisnegative
I work at United—and we’re not doing this. VPs And above got 50% of their salaries cut before CARES. No one else mandated at that time or since.
So maybe it’s happening at delta, but wanted to clarify it is not happening at United.
I work for jetBlue and around half of the things stated in this article are not true. Also, I appreciate the fact to have this options of time -off, I want my job to last longer than until September this year, so cutting costs now, will help us later.
I don't have too much sympathy for any of the involved parties here.
If these people were working anywhere else in the hospitality / travel industry, they would have already been in the unemployment line. Restaurants, hotels, etc. All of those have already dropped their workforce. and I don't blame them. There's only so long that you can continue to pay someone when there's no cash/business coming in.
This is where the unions should...
I don't have too much sympathy for any of the involved parties here.
If these people were working anywhere else in the hospitality / travel industry, they would have already been in the unemployment line. Restaurants, hotels, etc. All of those have already dropped their workforce. and I don't blame them. There's only so long that you can continue to pay someone when there's no cash/business coming in.
This is where the unions should have immediately stepped up to the plate, offering salary deferments or salary cuts rather than pissing and moaning about it. I was at the airport this weekend watching planes, hoping for some normalcy in life. But what I saw was anything but normal there. It was deserted. Entire concourses shut down. Only one concession stand open. No passengers. It's completely stupid to expect an employer to pay employees when there's no work, especially for an extended time, world-wide. This isn't a hurricane destroying a base or even a state or region. This is no demand in their entire system.
Again - Delta and United doing the same thing.
Can't post a story about those golden children, author might lose his status.
Seems like anti-JB story. Pathetic.
@ B6 CM, if you are not salaried or work in any of the support centers, you did not get the email. This was only sent to LSC, OSC, SSC CMs. And best part? Mike Elliott did not post this on HJB so no one could comment and rage about this.
I work for JetBlue. The verbiage you provided in the article was news to me. All of the correspondence I have received from the company never mentions taking UTO. While there are certainly new time-off programs being offered, they are all voluntary. I have to question your sources for this. I stay up to date on a daily basis with this situation, and never has any involuntary time off been mentioned.
@Tim. That is how I read it as well. But, two law firms where I have friends working received millions in PPP and still cut all salaries by 10% indefinitely. I asked my friends how this is possible under the PPP requirements and they both said that this 25% is the loophole that will still be forgiven if used for rent, mortgage, utilities. So that they can still reduce the salaries across the board.
...@Tim. That is how I read it as well. But, two law firms where I have friends working received millions in PPP and still cut all salaries by 10% indefinitely. I asked my friends how this is possible under the PPP requirements and they both said that this 25% is the loophole that will still be forgiven if used for rent, mortgage, utilities. So that they can still reduce the salaries across the board.
I dunno. Nor am I going to spend time looking for ways to fleece the system.
I got our funds. I am grateful for it. But I am not messing around with it and, besides, any loopholes out there defeat the intent of keeping staff on at full pay. Any less and I feel I have undermined my employees and the American taxpayer.
The airlines have always had a horrible business model and unfortunately, the unions, mostly the pilot unions have destroyed any profitability that the airlines could build into their reserves. My airline pilot friends would scheme and joke at work arounds in their contracts to make upwards of $300K while having multiple weeks, if not, months off...their house of cards has collapsed because most airline employees forgot who they worked for - the airline and not...
The airlines have always had a horrible business model and unfortunately, the unions, mostly the pilot unions have destroyed any profitability that the airlines could build into their reserves. My airline pilot friends would scheme and joke at work arounds in their contracts to make upwards of $300K while having multiple weeks, if not, months off...their house of cards has collapsed because most airline employees forgot who they worked for - the airline and not the union that they adored. Sorry, airline management is now held in contempt for finding a work around? Seriously? The new “norm” - senior airline pilots and FA’s might actually have to work a little harder and/or get paid a little less, welcome to life.
@Eskimo,
I said none of those things. We can't have a discussion if you're just interested in strawmen. Please consider increasing your level, or let the adults talk.
The information is misleading, JB is reducing airports crew pay by 20 percent regardless of FT or PT and giving the option to the employees of staying home with a 50 percent pay reduction, employee's must choose one but still they are getting paid, now a voluntary summer off is being given as well and they give some perks if this is chosen including medical benefits, of course this option is unpaid.
JetBlue offered the following options: summer off or Paid Time off at reduced hours (24hr/week). This completely goes against the CARES ACT.
That's a dumb idea when they have the 12 week CARES leave that the employees can take. Which lets them take 12 weeks of job protected FMLA leave at 75% pay if they have kids at home or Corona.
"If you have kids at home and would like to take 12 weeks FMLA leave, you will be compensated at 75% and this will be a job protected leave"
@Tim
You are correct, but my comment was directed at the moral implication of treating a corporation as if it's actually a living, breathing person. It is not. Watching a company go under is not the same as watching a person die.
@Stuart the PPP restricts wage reductions after the first eight weeks of funding. So, if they don't return wages back to normal levels (prior quarter) then that portion that exceeds 25% reduction per employee is not forgiven...at least that's the latest info I saw as of last week.
@David, from a legal and tax standpoint C corporations are treated as an individual. For good or bad, that is U.S. law and tax regs.
@Ben: There are some good articles online explaining the difference between being laid-off and fired- since you seem not to be clear on them.
It's extremely tone-deaf of you to insist on incorrectly using the term "fired" for all these folks losing their jobs now due to no fault of their own. Several readers have brought this to you attention now, so why do you continue to do this? There are other more accurate ways...
@Ben: There are some good articles online explaining the difference between being laid-off and fired- since you seem not to be clear on them.
It's extremely tone-deaf of you to insist on incorrectly using the term "fired" for all these folks losing their jobs now due to no fault of their own. Several readers have brought this to you attention now, so why do you continue to do this? There are other more accurate ways to report this news.
https://www.themuse.com/advice/laid-off-vs-fired-definition-meaning
>David says:
>April 20, 2020 at 3:10 pm
>A company can and should “fight for survival” (which is a loaded term itself, since it implies the >company somehow should be considered a person) on behalf of their shareholders.
B.S. employees are not slaves to shareholders and banksters. These people produce nothing. They only exploit. Maximizing shareholder return is a myth indoctrinated into everyone. Fiduciary responsibility means that the management does what is best...
>David says:
>April 20, 2020 at 3:10 pm
>A company can and should “fight for survival” (which is a loaded term itself, since it implies the >company somehow should be considered a person) on behalf of their shareholders.
B.S. employees are not slaves to shareholders and banksters. These people produce nothing. They only exploit. Maximizing shareholder return is a myth indoctrinated into everyone. Fiduciary responsibility means that the management does what is best for the company, which can include paying employees what they are worth and making it a good workplace, investing into clean aircraft, doing more than minimal maintenance, providing better than marginal healthcare, and investing into intangibles. The law DOES NOT say anything about shareholder return.
@Matt Fortini
So you are suggesting it's better to have employee earning 0% rather than 75% of their salary.
And it's better to have employee go sit idle at work earning full wage while many others are out of jobs.
Now if we do follow your idea of "New airlines would spring up the next second" Do you think they will still pay that same salary for the same seniority?
If you like going...
@Matt Fortini
So you are suggesting it's better to have employee earning 0% rather than 75% of their salary.
And it's better to have employee go sit idle at work earning full wage while many others are out of jobs.
Now if we do follow your idea of "New airlines would spring up the next second" Do you think they will still pay that same salary for the same seniority?
If you like going political, that is why Sanders camp goes nowhere (except hurting Joe Biden and indirectly help Trump get re-elected). That is why Soviet Union collapse. But if your crusade is to punish the rich just so you can live above poverty then enjoy Sanders camp.
@Matt - why protect the employees if you let the industry go bankrupt ? The industry is the only reason those employees have jobs. If you want to let the industry go bankrupt, then those employees lose that right of protection and follow in the footsteps of restaurant and retail employees that have shut their doors.
Delta has already done this to their non union employees. All employees are required to reduce hours by 25% for three months.
I told you guys over and over: let the airlines go bankrupt. Let shareholders and credit card hoarders get wiped out. Protect the employees, but only them.
New airlines would spring up the next second.
But noooo, it was super duper important to do this corporate welfare move. And look how they're returning the favor. Truly the worst outcome.
This is what fuels calls for a revolution in the Sanders camp. This right...
I told you guys over and over: let the airlines go bankrupt. Let shareholders and credit card hoarders get wiped out. Protect the employees, but only them.
New airlines would spring up the next second.
But noooo, it was super duper important to do this corporate welfare move. And look how they're returning the favor. Truly the worst outcome.
This is what fuels calls for a revolution in the Sanders camp. This right here. And as much as it pains me: they're right when it comes to corporate America's greed. It truly knows no bounds, and it's heavily supported by Democrats and Republicans alike.
Moving from over a thousand flights a day to just over a hundred a day and from 150 customers per flight to an average of 30 per flight is no small change. Any honest employee who works the frontlines and served hundreds of customers per 8 hour shift and now sees an average of 10 customers per 8 hour shift will agree to the need of reduced working hours. As much as employees want to...
Moving from over a thousand flights a day to just over a hundred a day and from 150 customers per flight to an average of 30 per flight is no small change. Any honest employee who works the frontlines and served hundreds of customers per 8 hour shift and now sees an average of 10 customers per 8 hour shift will agree to the need of reduced working hours. As much as employees want to be paid, they also want to remain employed at a Company they are comfortable with after this economic disaster is over.
I do know one workaround as @jetiquette has mentioned. I refuse to do this as it's unconscionable to me. But there are a few companies that are reducing payroll up to 25% (the allowable amount that can be used for rent, mortgage, utilities) by reducing salary for each employee. This is the PPP though and I have no idea the stipulations for the airline bailout which seems even looser in terms.
To me these bailouts...
I do know one workaround as @jetiquette has mentioned. I refuse to do this as it's unconscionable to me. But there are a few companies that are reducing payroll up to 25% (the allowable amount that can be used for rent, mortgage, utilities) by reducing salary for each employee. This is the PPP though and I have no idea the stipulations for the airline bailout which seems even looser in terms.
To me these bailouts are about one thing: Saving your employees the indignity of filing unemployment and being positioned better to come out ready to go when business opens up again.
Reduced hours is a workaround. Offering less hours of work at the same pay. There's ALWAYS a loophole to be found.
So, someone at JetBlue was quick to share their Internal email and Ben is running with it, without realizing Delta and United have done the same? As a side note, thanks for recognizing that the government set unrealistic, burdensome goals for airlines to adhere to - specifically having to continue service where people aren’t even flying. Lot of cost inflicted by that. I mean- this results in several airlines flying mostly empty to certain airports....
So, someone at JetBlue was quick to share their Internal email and Ben is running with it, without realizing Delta and United have done the same? As a side note, thanks for recognizing that the government set unrealistic, burdensome goals for airlines to adhere to - specifically having to continue service where people aren’t even flying. Lot of cost inflicted by that. I mean- this results in several airlines flying mostly empty to certain airports. Huge waste of money.
Many who worked 9/11 prefer a temporary period of some unpaid days, than perpetual paycuts. That still might happen come October, but if things really do bounce back one day - it would be a relief to be at current salary than having to spend years getting “raises” to eventually return to salary.
You were curious about if other airlines are - I just wish you already knew that they indeed already are, prior to JetBlue’s note today - so you would have written this article with less aim at JetBlue. The hurtful fact about the impact to JetBlue’s Crewmembers at its support center in NYC, is they have to face the horrendous cost of living. The sky high taxes, NY-sized mortgages and rents, etc. I know there is some relief there currently but there is fear about what to do after that relief is over (not just for airline employees).
Jet Jetblue Flight Attendant here. No one has been forced to do anything. Of course hours are cut, there aren't enough flights to go around. And as far as the leaves go, they were offered, in fact, there weren't even enough of each kind offered for everyone to get their first choice. I chose to take the paid leave because my health and safety are more important than flying people to 'vacations' and to 'visit...
Jet Jetblue Flight Attendant here. No one has been forced to do anything. Of course hours are cut, there aren't enough flights to go around. And as far as the leaves go, they were offered, in fact, there weren't even enough of each kind offered for everyone to get their first choice. I chose to take the paid leave because my health and safety are more important than flying people to 'vacations' and to 'visit friends'. I've been with the company 7 years and have plenty of things I would happily throw them under the bus for, this isn't one of them.
As a small business owner I can only imagine what the Govt. would say if I tried this after receiving our PPP grant. Which I have. Not to mention my employees who would now be thinking..."So, you are asking me to lose 24 days of pay under a hidden furlough making it not enough time for me to file unemployment?"
Basically they are milking the Govt bailout, they are milking their employees and leaving...
As a small business owner I can only imagine what the Govt. would say if I tried this after receiving our PPP grant. Which I have. Not to mention my employees who would now be thinking..."So, you are asking me to lose 24 days of pay under a hidden furlough making it not enough time for me to file unemployment?"
Basically they are milking the Govt bailout, they are milking their employees and leaving them with no alternative, and they are milking the American taxpayer who funded this. WOW.
They will all end up doing this - and while I will never defend the senior employees at airlines making their absurd wages - this can be disastrous for lower wage employees who live paycheck to paycheck. It's criminal.
@kenindfw
Ha NO! Look up the Cabotage Laws, you will never see a European Airline working domestic routes in the United States ever!!!
The 'Airlines doesn't CARES what the intent was' act.
@kenindfw
Like how we relied on other countries for the production of essential goods, right? What can possibly go wrong.
I'm going to throw something out here to see what people think. If we find that several airlines are "liquidated", not merely using bankruptcy protection to preserve assets, etc, would the federal government consider relaxing the rules so foreign carriers could also serve our domestic markets? Imagine Air France, Lufthansa, Cathy Pacific (if they hadn't completely pulled out) serve domestic markets. Imagine the competition!
Please no greatest hits. If there is nothing new to say that is ok! TPG will do anything for clicks...please don't sell your soul like they have.
JetBlue better find a merger partner becuase that will be the result of this. AA will partner with Alaska and JetBlue with DL? UA is a dead duck. I see the US with a new BIg 3 (AA, DL, SWA) and a new middle (UA and Alaska) with Hawaiian, Spirit and Frontier hanging around. Denver best stop the expansion, they won't need it now.
JetBlue is free to return the gift of $935 mm from the US taxpayers, furlough everybody and park their planes.
Delta is doing the same thing. Salaried employees are having 25% time off...unpaid of course.
I second the idea of ‘Lucky’s greatest hits’ - especially from pre-2015.
I second the idea of ‘Lucky’s greatest hits’ - especially from pre-2015.
How us "UTO" not a furlough?
A company can and should "fight for survival" (which is a loaded term itself, since it implies the company somehow should be considered a person) on behalf of their shareholders. What they can't do is scam taxpayer money to survive. Even actual people can't go around robbing banks and stealing from the taxman in a "fight for survival".
Either follow the terms in good faith, or don't take the loan. Being in bad financial health...
A company can and should "fight for survival" (which is a loaded term itself, since it implies the company somehow should be considered a person) on behalf of their shareholders. What they can't do is scam taxpayer money to survive. Even actual people can't go around robbing banks and stealing from the taxman in a "fight for survival".
Either follow the terms in good faith, or don't take the loan. Being in bad financial health doesn't absolve from your contractual duties.
I don't blame Jet Blue for doing this. At the end of the day, they are much smaller than US3 and doesn't have the financial wherewithal to withstand this kind of downturn. In reality is without government's help, most of the flight attendants, pilots, ground crew, management would have been let go last month. Jet Blue is just trying to stretch their cash reserve and hope for the best. If I were one of the...
I don't blame Jet Blue for doing this. At the end of the day, they are much smaller than US3 and doesn't have the financial wherewithal to withstand this kind of downturn. In reality is without government's help, most of the flight attendants, pilots, ground crew, management would have been let go last month. Jet Blue is just trying to stretch their cash reserve and hope for the best. If I were one of the staff there, I would ask for September time off as hopefully some sort of normalcy will be returned by then and if not, it'll be easier to look for a new job when there is more clarity.
I can't see this being a workaround - they are involuntarily furloughing employees for 24 days, even if the employees can choose when to take off, it is unpaid leave being forced on them, e.g. a furlough.
The worst part about this is that it reduces an employee's pay by about 20% over the next 5 months and also may prevent them from claiming any unemployment. I very much expect a class-action lawsuit as a...
I can't see this being a workaround - they are involuntarily furloughing employees for 24 days, even if the employees can choose when to take off, it is unpaid leave being forced on them, e.g. a furlough.
The worst part about this is that it reduces an employee's pay by about 20% over the next 5 months and also may prevent them from claiming any unemployment. I very much expect a class-action lawsuit as a result of this if jetBlue doesn't change its mind quickly on the issue.
So fuming that these airlines- many of which wanted nothing to do with the government before - are getting handouts. Of course I feel for workers but obviously none of this will end up helping them much. They will just go bankrupt soon, taking employees' pensions and customers credits with them. Then they'll magically reappear, with nothing to pay back and nastier than ever.
@Lucky - Hope you and your people are well - especially your mom. Just a thought - over at TPG they're publishing some of their "greatest hits" reviews from the past year. Thought it might be fun for you to bump some of your old favorites, especially from the very early days of the blog when your style was a bit different. I know a lot of us are looking for any diversion these days,...
@Lucky - Hope you and your people are well - especially your mom. Just a thought - over at TPG they're publishing some of their "greatest hits" reviews from the past year. Thought it might be fun for you to bump some of your old favorites, especially from the very early days of the blog when your style was a bit different. I know a lot of us are looking for any diversion these days, and these would be fun to read or re-read.
Thanks for keeping the content flowing. Hang in there.