US lawmakers urge Mnuchin to crack down on airlines cutting worker hours after taking billions in coronavirus aid

Key Points
  • Some airlines have reduced employee hours, leading to smaller paychecks as carriers reel from the coronavirus.
  • U.S. travel demand has plunged more than 90% because of the virus, prompting airlines to cut thousands of flights.
  • Three Senate Democrats say airlines that involuntarily cut workers' hours may be violating the terms of federal coronavirus aid.
An airport worker guides a Delta Air Lines Airbus A319-100 plane on the tarmac at LAX in Los Angeles, California, U.S., January 6, 2020.
Lucy Nicholson | REUTERS

Three Senate Democrats have urged Treasury Secretary Steven Mnuchin to crack down on airlines that are cutting worker hours, raising concerns that it might violate the terms of a federal stimulus bill that Congress passed in March that provided billions in coronavirus relief to carriers.

U.S. airlines last month started receiving portions of a $25 billion package of grants and company loans  intended to cover payroll expenses that bar carriers from laying off or cutting the pay rates of their employees through Sept. 30. But airlines including Delta, JetBlue and United have announced or already cut worker schedules as they slashed flights and scrambled to reduce costs after demand fell more than 90% because of the pandemic. That means workers are getting smaller paychecks, even if their pay rates are staying the same, CNBC reported in March.

"In light of Congress' clear intent, we are troubled by several carriers' recent announcements that tens of thousands of employees will have their hours reduced," wrote Sens. Charles Schumer, D-N.Y., Maria Cantwell, D-Wash., and Sherrod Brown, D-Ohio, in a letter dated Thursday seen by CNBC.

The Treasury Department, which administered the aid and set some of the terms, declined to comment.

United Airlines earlier this week walked back a plan to involuntarily cut the schedules of thousands of fleet and customer service workers that would have brought them down to part-time status after the union that represents the more than 25,000 employees sued, saying it went against the CARES Act and their labor contracts.

That also sparked concerns from Republican Sen. Josh Hawley of Missouri who told United CEO Oscar Munoz, "It was not the intention of Congress that recipients of this taxpayer money would then turn around and disguise pay reductions by cutting hours," in a letter, which he posted on Twitter.

The three lawmakers asked Mnuchin to issue guidance "clarifying that unilateral decisions to reduce workers' hours, and as a result their pay or benefits, are prohibited under the CARES Act."

Airlines executives have said the coronavirus has handed the industry its biggest crisis and that it will take years to recover. They have also said they expect to become smaller carriers, hinting at potential job cuts after the federal payroll aid rules run out after Sept. 30.

United Airlines to cut at least 30% of management, administrative jobs
United Airlines to cut at least 30% of management, administrative jobs