Advance Local followed other newspaper companies Wednesday in announcing a series of pay cuts and furloughs to bring expenses down and ride out the deep advertising recession.
The changes include pay cuts on a sliding scale from 2% to 20%, with higher salaried staff taking higher percentage reductions, effective May through the end of the year.
Most employees will be expected to take two weeks of furloughs in that period, though those plans are fluid.
And the company will suspend matching 401(k) contributions.
Caroline Harrison, who became Advance Local’s CEO earlier this year, wrote that the cost savings were “necessary to take some immediate steps to mitigate our losses and protect our long-term viability. We hope these cost-savings initiatives will be temporary and that, together, we can regain our excellent operational and revenue performance as quickly as possible.”
Her letter to staff emphasized the distinction between furloughs and layoffs, saying Advance hopes to bring the employees back “when the country starts returning to some semblance of normalcy.”
However, in two stages, Advance has let go of nearly all remaining unionized employees at The Cleveland Plain Dealer print operation. The 60 or so journalists left work at the related non-union cleveland.com digital site.
Besides the Plain Dealer, Advance titles include The Oregonian in Portland, The (Newark, New Jersey) Star-Ledger, and The (Syracuse, New York) Post-Standard.
The full text of Harrison’s letter is below:
I promised to share our additional cost-savings initiatives decisions with you as soon as they were fully developed. We have explored many options and have made decisions which we believe position us best to regain the revenue momentum we had prior to when the pandemic struck. However, foremost in our decision-making was the desire to lessen the impact on employees to the extent possible.
Like every other local news and information company in the country, the COVID-19 pandemic has caused a significant decline in our revenue. And, just like the vast majority of these companies, it is necessary for us to take some immediate steps to mitigate our losses and protect our long-term viability. We hope these cost-savings initiatives will be temporary and that, together, we can regain our excellent operational and revenue performance as quickly as possible.
I am so proud of the way that everyone has risen to this external challenge. The steps below are specifically designed to meet the effect the virus has had on us and in no way should be interpreted as a reflection of your performance.
The temporary changes, discussed in more detail below, will apply to all employees and include graduated tiered wage reductions, furloughs, and 401(k) company match suspensions. I know this is a lot to absorb and I want to make sure you clearly understand how all of this impacts you.
Graduated Tiered Wage Reductions – Effective May 2020 – December 2020
We are implementing a temporary graduated tiered pay reduction, from 2% to 20%, which is specifically designed to have a greater percentage of pay reductions from those who make the most. Thus, while the vast majority of employees will experience some temporary reductions, those in senior leadership will experience more substantial reductions. The amount of reduction will depend on your current base pay and follow a graduated tiered structure, similar to how tax tables work. No wage reductions will be made to employees making $35,000 or under (full-time or part-time annualized).
We will continually monitor our operations and revenue and will assess in September whether the temporary reductions need to continue throughout the rest of 2020. If we are in a position to restore base pay to pre-May 2020 levels prior to January 2021, we will do so. If not, the temporary reductions will remain in place through the end of the year.
The attached guide provides you with more details and examples. Your manager will provide you with a personalized wage impact statement next week, which will show the calculations applied to your base salary, your new temporary base salary and additional information.
This is not a layoff. Rather than respond to this crisis with layoffs, as some other companies have done, we have decided to implement furloughs. We greatly value each and every employee and need your contributions now and when the country starts returning to some semblance of normalcy.
Based upon the best information available today, we anticipate that all employees will be required to take two weeks of furlough, with the exception of local market Content employees (those Content employees managed by the local Content leads) and Production employees. However, this situation is evolving quickly with more information becoming available daily (in many cases, hourly), so our plan is to initially require all non-content and non-production employees to take a one-week furlough by the end of May.
We need our talented Content teams to continue their great work as a lifeline to the communities we serve, so we are giving them until July 31 to take a one-week furlough.
Because of the need to keep our vital production areas operating, local market Production employees will have until July 31 to take one week of furlough.
We will assess in June whether we need to continue with our plan for a second week of furloughs and update you immediately.
Furloughs must be taken in full week increments. Since you will not be paid by the Company during your furloughs, you may not work. We do not expect you to answer emails or perform any other work functions during this period. Importantly, there will be no disruption to your Company health benefits during your furlough. Your managers will work with you on scheduling the dates of your furlough.
Unlike in years past, the newly enacted federal emergency stimulus package, the CARES Act, may make you eligible for a federal unemployment benefit, in addition to state benefits, during a furlough period. This is an important reason why we chose furloughs over other options. Details regarding how and in which state to apply for state and federal unemployment will be provided to you with your wage impact statement.
Some employees have asked whether they can volunteer to take additional weeks of furlough. Those employees should speak to their managers to determine whether additional voluntary weeks are plausible.
Other key information:
- The CARES Act allows for an additional $600 in unemployment benefits per week (on top of state amounts) and is offering this benefit through July 2020.
- Unemployment and the CARES Act funds may not be available in some states, as the state may not consider furlough to be unemployment eligible or may not waive the one-week waiting period for new claims.
401(k) Match Company Suspension – Effective May 2020 – December 2020
The Company will temporarily suspend all 401(k) matches starting in May continuing through the end of the year. Even though there will be no match, your (non-Roth) contributions are still tax free.
We will continue to do our best to mitigate advertising losses and save on expenses wherever possible.
I want to emphasize that these savings initiatives are temporary. As I mentioned, we will continue to monitor the situation and our progress and make any necessary adjustments, updating you along the way.
I know this is not easy news to receive and we worked to create a fair plan that still provides you with health benefits and income.
We were on a positive track before the pandemic hit us and with your efforts, we will work towards getting back on that course. We are on this journey together. And we will get through it together.
If you have any questions, please talk to your manager or HR contact. I will continue to keep you apprised of any updates.
I wish good health to you and your families.
Rick Edmonds is Poynter’s media business analyst. He can be reached at firstname.lastname@example.org.