House report is sharply critical of Treasury’s handling of payroll program

Ultimately, the subcommittee concluded that instead of preserving jobs, the Trump administration’s implementation of the Payroll Support Program “significantly weakened the Program’s impact on job preservation.”

Treasury officials did not respond to a request for comment, but have previously said that they implemented the coronavirus relief package known as the Cares Act “as written,” adding that it has been critical to keeping workers on the job.

The subcommittee also faulted some of the companies that received government assistance.

“Documents uncovered during the Select Subcommittee’s investigation show that aviation contractors sought to avoid ‘unnecessary costs’ by terminating employees before executing [Payroll Support Program] agreements,” the report said.

The subcommittee said briefings with Treasury officials and contractors as well as its review of tens of thousands of documents found that the agency knew that companies were conducting layoffs, even as their applications for payroll support were pending, but failed to raise objections or require that the employees be rehired once the funds were received. The subcommittee alleged that led companies to “urgently” fire employees before signing agreements.

“Treasury’s decision to allow layoffs while applications were pending, in conjunction with the delay in executing agreements, meant that many companies paused layoffs for far shorter than the six months Congress intended,” the report said.

The report noted that although Treasury officials have maintained they did not have the ability to lower payroll support awards to reflect the size of a company’s current workforce, the subcommittee argued that is not in keeping with the provisions of the Cares Act.

The Payroll Support Program was created as part of the Cares Act to prevent massive job losses in the aviation industry as the demand for flights cratered in the face of a global pandemic. In addition to airlines, aviation contractors, including those that provide food and other support services to the industry, also were eligible to receive funds.

While the Cares Act directs Treasury to base the award amount on a company’s payroll costs between April 2019 and September 2019, the house committee’s report said that is designed to be a “proxy” for expected payroll costs between April 2020 and September 202o.

The report released Friday comes a few months after Democratic lawmakers on the subcommittee launched an investigation this summer into whether four aviation contractors violated provisions of the Cares Act by laying off thousands of workers, despite receiving millions of dollars from the government to keep employees on the job.

An analysis by the subcommittee found that more than $500 million in federal funds went to four companies that have laid off more than 7,500 workers.

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