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A few weeks back, I wrote about how United was planning layoffs after receiving the bailout money. Apparently, United used a loophole in the CARES act in order to be able to do the same, as reported by View from the Wing. However, a class action law suit is now alleging that United’s actions violated the terms of their taxpayer funded bailout.

United Bailout

Bloomberg Law reports that  the class action lawsuit specifically targets the fact that United forced their M&A employees to take 20 days of unpaid leave.

The proposed class action filed in federal court in Illinois says that by forcing management and administration employees to take 20 days of unpaid leave from May 16 to Sept. 30, United is in breach of its contract with the U.S. Treasury Department that secured funding to keep workers on the company’s payroll.

United informed these non-union employees of the leave mandates May 4 by saying those in “non-operational” roles will begin working a four-day week and 30% of them will be laid off in October.

The lawsuit seeks to recover compensation and damages for employee Kenneth England, and a class that if approved could expand to cover more than 10,000 eligible members.

A UA spokesperson dismissed the lawsuit and opined that it didn’t have any standing.

“This lawsuit is without merit, as we continue to employ 100% of our workforce,”

The Pundit’s Mantra

Airlines are facing a tough choice. Customers are flooding them with requests for cancellations. However, consumer demand is almost nil. United’s own actions vis a vis refunds have also come back to bite them. In addition, customers don’t view the airline as being very customer friendly and for good reason.

There’s a certain amount of public distrust and anger about the disbursement of these relief packages. Critics opine that these favor big businesses, while providing very little or no assistance to small businesses or individuals facing financial distress. This also played out in the full public eye given how the banks handled PPP disbursements.

Given United’s actions, it’s pretty clear that the CARES act gives airlines enough wiggle room to reduce hours. United dismisses the lawsuit, however, they’re surely not endearing themselves to customers and employees, given the way this saga is panning out.

Do you think the lawsuit has any legs? Or do you think United simply exploited a loophole in the CARES act? Tell us in the comments section.


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