Delta Air Lines, a major employer in Atlanta, has reached a settlement amounting to $8.1 million with the U.S. Department of Justice due to allegations of violating the False Claims Act.
This settlement addresses claims that Delta exceeded limits on executive compensation as stipulated under the federal Payroll Support Program (PSP) during the COVID-19 pandemic.
The PSP was initiated through the Coronavirus Aid, Relief, and Economic Security (CARES) Act in March 2020, aiming to support wages and benefits for airlines.
In exchange for these federal relief funds, airlines like Delta agreed to adhere to certain conditions, including a cap on the annual compensation of corporate officers and employees, set at $425,000.
Between March 2020 and April 2023, the Justice Department claims that Delta awarded compensation that surpassed these caps while inaccurately certifying its compliance in quarterly reports submitted to the U.S. Department of the Treasury.
Additionally, Delta allegedly failed to notify the Treasury Department upon realizing these violations, which prevented the government from seeking the repayment of funds.
Brett A. Shumate, Assistant Attorney General of the Justice Department’s Civil Division, emphasized the importance of compliance with the PSP, stating, “The PSP was intended to provide critical assistance to the airline industry during the pandemic.
The department is committed to holding accountable those who failed to abide by the terms and conditions governing their receipt and use of federal funds.”
In response to the settlement, Delta did not admit any wrongdoing.
The airline issued a statement asserting its belief in full compliance with the CARES Act requirements, describing the dispute as a difference over methods for measuring executive compensation during the pandemic.
Delta maintained that the claims against it lack merit and chose to settle to avoid the costs and distractions associated with litigation.
The airline expressed gratitude for the Treasury Department’s role in supporting essential services in the airline industry during the pandemic.
Moreover, this civil settlement resolves claims made under the whistleblower provisions of the False Claims Act, with H. Remidez LLC set to receive $850,500 as part of the agreement.
The case illustrates the heightened scrutiny and enforcement surrounding COVID-19 relief programs, particularly those promoting a “workers-first” approach.
The PSP specifically prohibited stock buybacks and mandated strict oversight regarding how the funds were utilized.
Sara Nelson, president of the Association of Flight Attendants-CWA, condemned Delta’s actions, praising the whistleblowers for exposing what she called a “gross injustice.”
She stated, “Delta’s violation of the PSP by exceeding compensation caps for corporate officers simply shows once again why Delta workers are organizing – because they know without a union, there is no accountability.”
This situation highlights concerns around corporate accountability in the wake of the pandemic, particularly in relation to labor relations.
Unlike the Paycheck Protection Program (PPP), where a significant portion of funds failed to reach workers, the PSP was designed to ensure that nearly all relief was directed toward employees.
The allegations against Delta, one of the largest airlines in the U.S., underscore ongoing issues regarding how businesses navigate the recovery process from the pandemic and the implications for their workforce.
image source from：fox5atlanta
