Letter to the Hon. Steve Mnuchin, Secretary of the Treasury - Garcia, Schakowsky, Porter Ask Treasury Secretary to Clarify Airline Guidance on Layoffs

Letter

Dear Secretary Mnuchin,
We write you today with grave concern and broad opposition to your recent statements regarding
carriers' compliance with the terms set out in Subtitle B of Title IV of the Coronavirus Aid,
Relief, and Economic Security (CARES) Act (P.L. 116-136). As you are aware, Congress' intent
when it included Air Carrier Worker Support provisions was to prevent airline workers from
suffering the immediate negative economic effects of a virus they had no ability to prevent.
Reducing hours while "maintaining rate of pay" goes directly against this goal and places these
airlines out of compliance with the CARES Act.
United, Delta, and JetBlue airlines have all unilaterally cut workers hours -- in some cases
significantly decreasing these employees' pay and benefits. The creative position held by these
airlines is that an hours cut is somehow unrelated to compensation, which is protected under the
CARES Act. The hour cuts imposed by these carriers have made some workers eligible for
unemployment assistance -- a circumstance the legislation was explicitly designed to prevent.
These carriers are very clearly out of compliance with the letter and spirit of the law.
A faithful execution of the CARES Act requires the Treasury to cite these cuts as violating
federal law. Anything less than direct and immediate enforcement action from your department
is a failure for the American people. Permitting this type of interpretive acrobatics will erode
public trust in our federal relief efforts and further subject taxpayer dollars to suspicion that relief
funds were used to pad the pockets of shareholders at workers' and taxpayers' expense. While
the law may allow for negotiated hours reductions, made in concert with the workforce and
presumably in exchange for some other benefit of equal value to the workers, it very clearly
reserves the decision of accepting such a cut to the workers and not the companies.
We are also deeply concerned that the Treasury has failed to act in accordance with its statutory
mandate under the CARES Act to deliver payroll assistance to the most vulnerable aviation
workers. Earlier this month, 350 workers at Miami Air lost their jobs because the Treasury chose
not to provide program assistance to the carrier as it worked through a bankruptcy proceeding
caused by the pandemic. Company executives were directly in touch with the Treasury to secure
payroll assistance, to no avail. Treasury has thus far failed to explain why it denied their workers
their paychecks when it was within their authority to do.
The financial outlook is dire for the airline industry, which is why Congress supported U.S.
commercial aviation in recent relief packages. However, our intent has always been to protect
airline workers (as the title of this section of the CARES Act makes clear), not corporate salaries
or shareholders. The need for protections like these has been made clear over the past several
years as the commercial aviation industry spent record profits on stock buybacks, which
overwhelmingly benefit institutional investors and individuals with stock options. Meaningful
efforts to build financial reserves or return workers' pay and benefits to pre-recession levels were
not made, and airlines are now telling their workforce, with complicity from the Treasury, "draw
down your rainy-day fund."
Many carriers have entered into voluntary agreements with workers to take leave or reduce their
hours. In your role overseeing commercial aviation assistance as part of CARES Act, you should
be doing everything you can to promote this sort of outcome, while discouraging actions like
those taken by United Airlines and others.
Moving forward we respectfully request the following actions:
1. Release guidance clarifying that top-down, unilateral decisions to reduce hours, and as a
result reducing pay and benefits, are prohibited under CARES Act.
2. Comply with all Congressional oversight requests, particularly those related to
Treasury's Payroll Support Program Agreements.
3. Provide Congress with a detailed plan with respect to your own vigorous oversight of
Payroll Support Program Agreement, in particular your plan for remedies in the cases of
non-compliance.
4. Please disclose whether you or any other Treasury officials provided carriers with
guidance that cutting worker hours would be allowable under the terms of the CARES
Act. If so, which carriers did you and your team consult with and what guidance did you
provide?
Please respond, electronically, no later than June 5th. Thank you for your time and consideration
during these difficult times.