Faced with the choice between job layoffs or a second round of unpaid furloughs for employees, executives at the financially troubled Gannett Co. announced today they were selecting the latter course.
Gannett, the parent firm of The Cincinnati Enquirer, announced a furlough program that will require most non-unionized workers to take at least five days of unpaid leave sometime in April, May or June. The move is expected to save the company about $20 million.
Additionally, employees who earn more than $90,000 annually might be asked to take a temporary salary reduction.
In January, executives announced a similar furlough that required workers to take a five-day unpaid furlough from their jobs before the end of March, prompted by declining stock prices and advertising revenues.
In today’s memo to workers from Gannett CEO Craig Dubow, he wrote, “We are about to begin the second quarter without any real relief in sight from this unprecedented economic downturn and its challenge to our company. Despite all of your truly remarkable efforts to reverse the trend, our revenue numbers continue their downward slide and we have been faced with more difficult decisions.”
Details of the current furlough will vary among employees and locations, Dubow added. The length of the furlough for employees will depend on each division’s operating needs and results.
Also, higher-salaried employees will be asked “to make an additional sacrifice,” which could include a second furlough week or a week’s furlough plus a temporary salary reduction equivalent to one week’s pay for the quarter.
Further, some hourly employees won’t be required to take a full week. Each division or location will have different requirements for employees in this category, Dubow wrote.
This is consistent with an earlier item reported by CityBeat that quarterly furloughs at Gannett newspapers likely will continue through the remainder of 2009. If accurate, that means many workers will end up taking 20 days of unpaid leave this year.
“As with our first program, we are doing furloughs to hopefully mitigate the need for layoffs and to preserve our operations in the face of these extraordinary economic times,” Dubow wrote. “We believe this is the best possible course, given the alternatives.”
A second memo, written by Robert J. Dickey, Gannett’s U.S. Community Publishing (USCP) president explained how newspaper division employees would be affected.
“Your current pay level will determine the length of your furlough,” Dickey wrote. “USCP employees at the operating units earning $90,000 and above will furlough for two weeks during the quarter. USCP employees at corporate headquarters earning $90,000 and above will take one week of unpaid leave and also will have a temporary pay reduction of the equivalent of one week’s pay. That reduction will be spread equally over the three-month period.
“All other USCP employees will be on the same program as last quarter and furlough for one week,” Dickey added. “Your level of pay is based on your salary or hourly wage. Commissions, bonuses and overtime earnings are not part of the calculation. Your supervisor will provide the specific details.”
Here's a fact sheet about the furlough distributed by Gannett.
Q. Why has the company decided to do a second round of furloughs?
A. Economic conditions have worsened and are expected to continue to be difficult. Furloughs allow us to preserve operations, be fair to as many employees as possible and still reduce expenses. Plus, furloughs are an alternative to layoffs and may help us reduce the need for layoffs down the line.
Q. Aren’t there also pay reductions?
A. Higher salaried employees in each division and corporate will take either an additional week of furlough or a temporary pay reduction equal to a week’s pay spread across the quarter. The number of employees impacted by this differs by division.
Q. Is everyone going to participate?
A. As with the first round, most employees in all divisions in the U.S. and the corporate staff will participate, depending on a variety of factors. Newsquest is doing a furlough program that is consistent with labor regulations in the UK.
Q. Will there be any exceptions at all?
A. Certain employees will be granted exceptions as a group. Also, there will be exceptions for newly hired employees and for other individuals and units who are impacted by other expense reduction measures. Some high volume sales people with significant commissions as part of their compensation may be exempted
Q. This is a financial hardship for me. Can there be an exception for me?
A. There will be no individual hardship exceptions. We encourage all employees to make use of resources such as the Employee Assistance Program (See question “What other resources do I have…”).
Q. How much money is the company saving by doing this?
A. A final number is not available at this time. The first quarter furlough program saved approximately $20 million.
Q. Does this mean there won’t be any layoffs this year?
A. That decision entirely depends on what happens with revenues during the rest of the year. No final decision has been or will be made at this time. Again, furloughs hopefully will moderate the need for layoffs in the second quarter.
Q. Does this mean the company is in really bad shape?
A. Gannett continues to be a solid company and we want to stay that way. Instituting furloughs at this time is a sound financial move by a sound company that is facing severe economic conditions. Furloughs are one of a number of steps the company is taking, such as reducing the dividend and consolidating operations, to maintain cash flow and stay strong.
Q. I am required to take the unpaid leave. Why can't I take a pay cut instead?
A. This is a furlough program. There will be temporary pay cuts for some employees. A permanent pay cut program is another way to cut costs, and may be considered at some future date. We don’t want to do different programs for different individuals.
Q. Can I give up a week of vacation instead?
A. No, because vacation days are paid there is no savings to the company.
Q. Why are the rules different for hourly and salaried employees?
A. Hourly employees and salaried employees are subject to different rules set by the U.S. Department of Labor. Basically, salaried employees are paid for a week’s worth of work, not in smaller increments.
Q. May hourly workers take furlough time in part-day or hourly increments?
A. We are asking the furloughs be taken in full day units.
Q. If a salaried employee works while on furlough because of an emergency, can he or she then take a new furlough week later?
A. Every exempt (salaried) employee will need to complete the furlough as one full payroll week. Furloughs need to be scheduled so back-up personnel are available. If there is an emergency and you need to return to work, a new furlough will be scheduled for a later date. Your supervisor must approve your return to work in advance.
Q. Does the furlough include part-time workers?
A. Yes. The furlough should be based on their scheduled or variable time and should be a week’s work of time.
Q. Can I use part-time people to fill in for furloughed workers?
A. Not if it expands their hours and costs more.
Q. Can a salaried employee work on the weekends?
A. There can be no work done during the payroll week at all so it depends entirely on the operating unit’s payroll week.
Q. How will my furlough be scheduled?
A. Furloughs will be scheduled so that normal operations can continue without interruption during the furlough period. You will have an opportunity to discuss your schedule with your supervisor, who ultimately must decide what works best and what you need to do to prepare for your being out.
Q. Why can’t I do any work while I am out?
A. There are very specific rules that must be followed. Federal and state laws require that employees, whether hourly or salaried, must not do any kind of work on an unpaid leave. That includes reading or responding to e-mails, calling or responding to calls from colleagues and being on site at your location at any time during your furlough days.
Q. Who will cover my job while I am out?
A. You and your supervisor should discuss how your responsibilities will be handled while you are out. If you have a company e-mail address and/or phone extension, you should leave a message directing people to the employee designated to reply in your absence.
Q. What happens to my benefits while I am out on furlough?
A. Benefits such as your health and life insurance continue during your furlough. Deductions for your health and optional life insurance coverage will be taken out of your paycheck for any week in which furlough day(s) are taken. You will continue to earn vacation credit during your furlough. If you participate in the Gannett 401(k) Savings Plan, no participant contributions and company-matching contribution will be made for the time you are not paid while on furlough. You are not eligible for a distribution of your pension benefits while you are out on unpaid leave. Garnishments will continue to be taken.
Q. Am I eligible for state unemployment benefits while I am out on furlough?
A. Unemployment benefits vary by state. Some states have waiting periods before unemployment benefits commence; others do not. You should contact your local unemployment office for more information.
Q. What other resources do I have to assist me while I am out on furlough?
A. Your local Employee Assistance Program can provide counseling or direct you to resources in your community to help you and your family through this difficult period. As a reminder, the Gannett 401k Savings Plan provides you with the ability to borrow from your account, provided you are eligible under the terms of the Plan. More information is on the Plan’s website at www.ybr.com/gannett, or you can call the YBR service center at their toll free number: 866.343.2333.
Q. I am also taking a temporary pay reduction. Am I required to take time off for this?
A. No, you are not required to. Time off is a function of your work load and your department’s work load.
Furloughs and temporary pay cut programs by division
Across the company: Some locations and groups of employees are exempt, due to other cost cutting efforts. Represented employees will be asked to participate in lieu of layoffs.
U.S. Community Publishing
Virtually all employees will take the equivalent of one week of unpaid leave. Hourly employees must take five days over the course of the three-month quarter, scheduled with the approval of their supervisor. Salaried employees must take one full week at one time. In addition, employees who earn over $90,000 will take a second week of unpaid leave.
All employees will take at least one week unpaid furlough. Hourly workers can take the five days at any pre-approved time over the three-month quarter. Salaried employees must take the furlough one week at one time. In addition to the furlough week, Broadcast’s management team and department heads at each location will take a temporary pay reduction equivalent to one week’s pay.
All employees will take at least one week unpaid furlough in the quarter. Hourly employees will take the equivalent of one week (five days) over the three-month period, scheduled with the approval of their supervisor. All others will take one week of unpaid furlough plus a temporary pay reduction equivalent to one week’s pay.
USA Today/USA Weekend
All salaried employees will take one week unpaid furlough. Top 15% of salaried employees will take two weeks of unpaid furlough. Hourly employees can take any five days over the three month period, scheduled with the approval of their supervisor.
Hourly employees will take three unpaid leave days in the quarter, scheduled with the approval of their supervisor. All other employees will take one week of unpaid furlough. Additionally, vice presidents and above will take a temporary reduction of one week’s pay over the quarter.