On Wednesday, lawmakers sent letters to the companies, including three that provide catering services to airlines: Flying Food Fare, Gate Gourmet and Swissport. A fourth, G2 Secure Staff, provides services to airports including baggage handling, wheelchair assistance and pre-departure screening, according to its website.
“Congress created this program to ‘preserve aviation jobs’ by providing wage assistance to companies in exchange for keeping workers on the payroll,” lawmakers wrote. “Giving payroll support to companies that engaged in mass layoffs is not only contrary to congressional intent, but also wastes taxpayer dollars by covering the cost of payroll for employees that have already been laid off.”
The letters — which urge the companies to rehire the employees or return a portion of the money — were signed by Reps. James E. Clyburn (D-S.C.), chairman of the select subcommittee on the coronavirus crisis; Maxine Waters (D-Calif.), chairwoman of the Financial Services Committee; and Peter A. DeFazio (D-Ore.), chairman of the Transportation and Infrastructure Committee.
The lawmakers also are asking companies to provide information about their dealings with the Treasury Department, which administered the program, including whether company officials informed the government about layoffs that occurred between when an application for aid was submitted and when a final agreement was signed. Treasury officials noted the Cares Act does not require companies to rehire employees who were let go before the signing of an agreement.
In a letter sent to Treasury Secretary Steven Mnuchin, lawmakers expressed concerns about the agency’s handling of the program. “We urge Treasury to stop providing taxpayer-funded payroll support for workers that have been laid off and to recover any funds that were inappropriately awarded,” Clyburn, DeFazio and Waters wrote.
Treasury officials said they have implemented the Cares Act “as written,” adding that it has been critical to keeping workers on the job.
“The Payroll Support Program is supporting hundreds of thousands of aviation industry jobs, keeping workers employed and connected to their healthcare, and has played a critical role in stabilizing and preserving the U.S. airline industry,” said Treasury officials.
In addition to providing support for airlines and cargo carriers, the $2 trillion coronavirus relief package known as the Cares Act also provided billions to aviation contractors to keep workers on the job.
According to the committee, Gate Gourmet laid off more than 3,500 workers in California, Georgia, Illinois and New York and is slated to receive $171 million through the Cares Act.
In a statement, Nancy Jewell, a company spokeswoman, said any layoffs or furloughs were done in accordance with its collective bargaining agreements.
“We are committed to complying with all our obligations and will use all CARES Act funds exclusively for the continuation of payment of employee wages, salaries, and benefits,” she said.
Another contractor, Flying Food Fare, laid off more than 800 employees in Arizona, California, and Hawaii since the legislation was signed in late March, the committee said. It received $85 million from the Cares Act and also appears to have received loans through a separate Paycheck Protection Program aimed at helping small businesses. Company officials did not respond to a request for comment.
Meghan Cohorst, a spokeswoman for Unite Here, a union that represents workers at Flying Food Fare and Gate Gourmet, said that even before the layoffs, airline catering jobs were among the worst paid and the workers the worst treated in the industry. Employees of the companies typically make less than $15 an hour, with the lowest paid earning less an hourly wage of less than $9. The work typically involves preparing food to be served on airplanes in large industrial kitchens near airports, sometimes working in rooms chilled to keep food fresh, Cohorst said.
“They’re exactly the type of person in the country who these federal funds were supposed to help,” Cohorst said. “We think that the behavior of these companies, especially Gate Gourmet and Flying Food Group is reprehensible.”
The 3,567 layoffs that congressional investigators identified at Gate Gourmet represented almost half of the company’s pre-pandemic workforce of around 8,000, Cohorst said.
Swissport is set to receive $170 million in payroll support funds, the second-highest sum of any aviation contractor, the committee said. Records show that in the weeks before it signed its agreement, it laid off nearly 3,000 workers in Florida, Michigan, New York, Virginia, and Washington.
In a statement, Swissport said it has met all requirements under the Cares Act. “Swissport believes it is currently fully-compliant with the terms of the PSP Agreement entered into with U.S. Treasury and will remain so throughout the term of the PSP Agreement,” the statement said. “We look forward to working cooperatively with the relevant committees through the appropriate channels to address their questions.”
Similarly, the committee reported that officials at G2 Secure Staff — which is expected to receive $85 million under the federal program — laid off nearly 400 workers in Georgia, Michigan, Colorado, Virginia and California on the day the Cares Act was signed into law.
Daniel Norman, the company’s chief executive and president, said it welcomes “the opportunity to fully explain the actions we took, working closely and transparently with our employees and the SEIU, to save jobs and benefit our workers just as Congress intended.”
Rob Hill, a vice president at union 32BJ SEIU, which represents airline contractors, said Treasury took too long to get the money to the companies. Many didn’t strike agreements with the government until late June, despite the law that provided for the money passing in March. Hill said Treasury also decided to allow recipients to spend the money at their own pace, rather than setting a deadline that would have encouraged them to return workers to their payrolls.
“They could easily fix it,” Hill said, by requiring the money to spent within a certain time frame.