An American Airlines flight attendant forwarded me a change.org petition, which merits discussion from a perspective of legality and equity. Should flight attendants who accepted an early exit package receive the same favorable terms as their colleagues who held out longer? Or was the American Airlines VEOP package fair and final?
VEOP: 800 American Airlines Employees Acted Too Soon
In March, 800 flight attendants participated in a Voluntary Early Out Program (VEOP). This was in the early stages of the pandemic hitting the United States and as American Airlines saw revenue rapidly declining, it hastily prepared an offer to reduce its workforce.
Over a two-week period, in which the deadline was extended twice, employees were warned that this was the last and best final offer and that if they did not accept the termination package, their furlough packages would not be nearly as generous.
Two weeks later, though, American Airlines announced it would receive CARES Act funding and all employees would remain on the payroll through October 1, 2020. With a little bit of breathing room, American Airlines sat down with union officials and crafted a new VEOP that was far more generous than the first round, adding $100-150K in lifetime medical benefit and eight positive space tickets.
The petition, which appears on change.org, argues that as the beneficiary of government funding, AA should grandfather in the 800 employees into the same more generous package.
“We were the first to sign, hearing their plea, believing they had nothing more to offer. Now that they have received government help, we would like them to share it with our group. Delta and United Airlines have offered a very similar package to their flight attendants and have now grandfathered those who retired earlier in the year and we hope our airline will do the only right and ethical action and give the same medical reimbursement to us.”
Legal Vs. Equitable Remedies
Without reviewing the contract, it seems futile to make arguments based upon contract law principals. Maybe the employees could say the contract was entered into under fraudulent inducement. This occurs when a party tricks another party into signing a disadvantageous agreement by using fraudulent statements and representations. Since fraud negates the “meeting of the minds” at the heart of a valid contract, the injured party can terminate the contract or seek other damages.
But I don’t think American Airlines deliberately lied to employees in March. At the time, CARES Act funding was not a done deal and demand was rapidly collapsing. It would be difficult to prove that AA did not consider the exit package the last and final offer at the time.
But there are issues of equity at play here. I’m not even talking about the common law body of law known as equity, since equitable relief generally requires an adequate remedy at law.
Instead, I think there is something to the paragraph in the petition I quoted above. Some employees may have bailed early for selfish reasons, but many did so because they sincerely took AA at its word that it was insolvent, they would lose their job anyway, and this was the best way to help both parties.
The contract was fair, in the sense that both parties voluntarily entered into it at the time and received a bargained for exchange. I see no valid legal basis upon which to challenge the exit package. But if AA is willing to reward those who refused the call of duty and held out, I hope that it seriously considers offering the same benefits for those who chose to bow out earlier and now face a very uncertain new world. I signed the petition. It is worth asking.
image: American Airlines