**UPDATE: 14/05/2020 @ 17:40 UTC – United Airlines has responded for comment.**
United Airlines is facing a lawsuit after a suggestion that it may be in breach of one of its bailout conditions. The airline, which received funding through the CARES stimulus package, could be found guilty of infringing terms after it requested some of its staff to take 20 days of unpaid leave. The lawsuit was filed by a single employee but could have implications for over 10,000 staff.
United Airlines sued for violating bailout terms
On Wednesday, May 13, United Airlines was informed of a lawsuit against it in which it was said to have breached the terms of its bailout. The airline, among others like Delta and JetBlue, is benefiting from a $50bn stimulus package from the government as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
The CARES financial funding is meant to help airlines see through the coronavirus pandemic. The money should be designated to protect the livelihoods of staff where airlines would otherwise not be able to pay.
However, to conserve cash, some airlines are taking cost-cutting measures even further. In an internal memo on Monday, May 4, the Executive Vice President of Human Resources at United told non-operational employees that they were to take one day off per week as unpaid leave.
This new four-day working pattern for some employees would save the airline a lot of expenditure. It is due to come into effect on Saturday, May 16, until September 30. However, seeing as all employees should be retained until September 30, does this could potentially violate United’s obligations.
One of the employees affected by this decision was Kenneth England, who contested the proposition by suing the airline for that exact reason.
What is the issue?
Mr. England works at Chicago O’Hare International Airport as a Shift Manager for United. He will now be one of around 11,500 United employees affected by this mandate of unpaid leave. However, England believes that United’s approach contradicts the regulations of the CARES act. He’s seeking compensation for himself and his colleagues if United is culpable.
The US government’s financial funding should go to supporting wages. The scheme prevents companies from firing employees for financial stability. Staff should technically be able to work in their regular shift pattern, but their salaries will be paid via government funding.
On its website, United even makes this admission for itself. It says:
“These funds will cover a portion of our pay and benefits costs through September 30, and we are thankful for the support provided to our employees and their families by the CARES Act. This financial support is critical to our people, who are ensuring air service to communities throughout the country and supporting the shipment of much-needed medical supplies and travel of health care professionals around the globe.”
Was the unpaid leave forced?
There is confusion around the intricacies of the CARES act. The funding is meant to help individuals through tough times and should not be used as ‘free’ money for businesses. Another issue is surrounding the wording of United’s unpaid leave. Was United’s plea for volunteers for unpaid leave as voluntary as it seemed?
United stands firm in its decision and said that the lawsuit doesn’t hold water. The Chicago-based carrier maintains it still employs all of its workers. A representative from United Airlines told Simple Flying:
“This lawsuit is without merit, as we continue to employ 100% of our workforce. Already, tens of thousands of United employees, in an extraordinary show of loyalty to the company, have voluntarily agreed to unpaid leave because they want to help the company survive the crisis. This action is the latest proactive, cost-cutting measure we have taken to offset an unprecedented drop in travel demand and will help us to achieve our overall goal to preserve as much financial flexibility now so we can not only survive this crisis but thrive once it is behind us.”
There can be no doubt about the amount of pressure that has befallen the airline as a result of the coronavirus crisis. In October, the airline plans to cut more than 3,400 workers from their jobs in management and administration. Could this lawsuit demonstrate that United is in much more difficulty than it’s let on?