USA Today laid off about 70 people last month. Those who lost their jobs received a week of pay for every year of service, health care through the end of September and the vacation pay they’d already accrued for the year.
But as they turned in their laptops and cellphones, some USA Today journalists were surprised to find out who would pay a chunk of their farewell package: their state unemployment office.
USA Today is owned by Gannett, which doesn’t always pay laid-off workers a traditional severance. Instead, as in the case of the recent layoffs, it may provide a “transitional pay plan.” In one of these plans, Gannett, through a contractor called Total Management Solutions, makes up the difference between a worker’s old paycheck and their unemployment check for a certain amount of time.
Gannett didn’t make anyone available for an interview on this subject, but spokesperson Jeremy Gaines told Poynter in an email that “The Transitional Pay Plan (TPP) is one type of severance plan that Gannett offers. It provides one week of pay for every year of service to a maximum of 36 weeks, offset by an employee’s state unemployment benefit.”
If employees take on any paid work before the transitional pay period ends, their benefits — which are not subject to FICA deductions — are either reduced or lost. If they get a new job, the payments stop. Employees have to call in every week to their state unemployment office as well as to Total Management Solutions.
“They both interrogate you: ‘Are you employed?'” one former USA Today staffer who’d worked for the paper for more than 15 years told Poynter. “If you forget to call them one week you can presumably lose everything.”
The literature Gannett provides laid-off employees says the transitional pay benefit “provides a substantial benefit to employees as they transition from Gannett to a new job. It also allows Gannett to reduce its transition costs.”
“The taxpayers are paying part of my paycheck, basically,” said another laid-off staffer I spoke with, who said she found she could easily register with the Virginia Employment Commission online: “It’s not utter humiliation.” She found one way to take on freelance work and maintain her benefits while searching for a new gig: After speaking to her accountant, she set up an LLC and will ask freelance clients to pay her company instead.
Gannett has used this type of plan, also called supplemental employment benefits, since at least 2009. The New York Times reported on how Gannett used the plans with 1,400 people it laid off in July of that year. The distinction between transitional pay and severance, Richard Pérez-Peña wrote, was “lost on employees who say that the practical effect of being paid — or not — is the same, no matter how the program is labeled.”
Representatives of other newspaper companies, including Tribune, McClatchy and the New York Times Co., told Pérez-Peña in 2009 they provide more traditional severance packages. Attempts by Poynter to poll publishers on this point in 2014 did not meet any success.
USA Today’s newsroom doesn’t have a union, which is not uncommon among Gannett papers. (The Detroit Free Press, the Rochester, New York, Democrat and Chronicle and the Indianapolis Star are among the few Gannett properties that have Guild representation.) But supplemental employment benefit plans developed in union-dominated companies in the ’50s, said Rick McHugh, a senior staff attorney at the National Employment Law Project. “The idea was really to have a guaranteed annual wage” at a time when layoffs were prevalent in the steel and auto industries, he said.
In many states, McHugh said, severance counts as remuneration and disqualifies workers from getting unemployment benefits: “That varies widely, but in the majority of states, say you worked there 10 years, and they’re giving you 10 weeks’ severance, you would lose 10 weeks’ unemployment benefit,” he said.
“I have to say this is a more beneficial approach than I would expect from Gannett,” said McHugh, who represented newspaper strikers concerning their unemployment insurance, including claims against Gannett, during the Detroit newspaper strike of 1995-2000. In the United States, he said, “with at-will employment, basically, there is no obligation to pay employees anything when you lay them off.”