Delta to pay $8.1M over COVID-era executive pay violations claim
Delta Air Lines Bombardier Boeing 757-200 aircraft as seen arriving, on final approach for landing in New York JFK John F. Kennedy International Airport. (Photo by Nicolas Economou/NurPhoto via Getty Images)
ATLANTA - Delta Air Lines, which is one of Atlanta's largest employers, has agreed to pay $8.1 million to resolve allegations that it violated the False Claims Act by exceeding executive compensation limits outlined in the federal Payroll Support Program (PSP) during the COVID-19 pandemic, the U.S. Department of Justice announced Tuesday.
The PSP, enacted by Congress in March 2020 through the Coronavirus Aid, Relief and Economic Security (CARES) Act, was designed to support employee wages and benefits for passenger and cargo airlines. In exchange for pandemic relief funds, participants, including Delta, agreed to specific conditions — among them, a cap on compensation for certain corporate officers and employees earning more than $425,000 annually.
What we know:
Delta entered PSP agreements with the U.S. Department of the Treasury in 2020 and 2021, agreeing to those compensation limits. According to the Justice Department, Delta awarded compensation between March 2020 and April 2023 that exceeded those caps and inaccurately certified compliance in quarterly reports submitted to Treasury.
Additionally, prosecutors say Delta failed to inform the Treasury Department when the violation was discovered, denying the government the opportunity to seek repayment of funds.
"The PSP was intended to provide critical assistance to the airline industry during the pandemic," said Assistant Attorney General Brett A. Shumate of the Justice Department’s Civil Division. "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."
The other side:
Delta has not admitted any wrongdoing. In a statement, Delta said:
"Delta strongly believes it fully complied with all requirements of the CARES Act. At issue is a disagreement about a technical matter involving the time periods used to measure executive compensation during the pandemic. Delta has consistently maintained the claim is without merit and settled to avoid the expense and distraction of litigation. Delta remains grateful for the Treasury Department's efforts that kept essential airline employees operating our nation's air travel system."
The civil settlement also resolves claims brought under the whistleblower provisions of the False Claims Act by H. Remidez LLC, which will receive $850,500 as part of the agreement.
Why you should care:
The case highlights the scrutiny and enforcement tied to COVID-19 relief programs, especially those that were billed as "workers-first" initiatives. The PSP specifically banned stock buybacks and required stringent oversight on how funds were used.
Sara Nelson, president of the Association of Flight Attendants-CWA, which helped craft the PSP, issued a strongly worded statement condemning Delta's actions.
"We applaud the whistleblowers who came forward to shine a light on this gross injustice and violation of a law that simply required Delta to use government relief funds to pay their workers and not their executives," Nelson said.
"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."
Big picture view:
Unlike the Paycheck Protection Program (PPP), where less than 35% of funds reached workers, the PSP was structured to ensure nearly 100% of relief went directly to employees. The alleged violation by one of the country’s largest airlines underscores continued concerns around corporate accountability and labor relations during pandemic recovery efforts.