Delta to Pay $8.1 Million Over Executive Pay Breach in Pandemic Relief Program

Key Takeaways

• $8.1M Settlement: Delta Air Lines will pay $8.1 million to resolve allegations that it violated the False Claims Act by exceeding executive compensation caps tied to federal pandemic relief funds.
• Breach of Payroll Support Terms: Between March 2020 and April 2023, Delta allegedly paid some executives more than the $425,000 annual limit required under the Payroll Support Program (PSP).
• Failure to Report Violation: The DOJ claims Delta submitted inaccurate compliance certifications and failed to alert the Treasury Department after discovering the breach internally.

Deep Dive

Delta Air Lines is facing a multimillion-dollar bill after allegedly crossing the line on pandemic relief rules and keeping quiet about it for years. The Atlanta-based airline has agreed to pay $8.1 million to settle claims that it violated the False Claims Act by awarding excessive compensation to top employees in breach of its agreement under the federal Payroll Support Program (PSP).

The PSP was no ordinary bailout. Created in the thick of the COVID-19 pandemic by Congress in March 2020, the program was designed to keep airline and contractor employees on payroll as the travel industry all but ground to a halt. In exchange for support, companies like Delta agreed to certain conditions, including strict limits on compensation for executives earning more than $425,000 a year.

According to the Justice Department, Delta signed those agreements in 2020 and 2021 but allegedly flouted the rules between March 2020 and April 2023, awarding compensation that surpassed the agreed-upon caps. What’s more, the government says the airline inaccurately certified that it was playing by the rules in its regular reports to the Treasury Department. And when the breach was discovered internally, Delta allegedly failed to notify Treasury, a key obligation that would have triggered the government’s right to claw back the 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 DOJ’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.”

U.S. Attorney Theodore S. Hertzberg for the Northern District of Georgia put it more bluntly, “When companies accept federal assistance, especially generous pandemic-relief funds like those at issue here, they owe a duty to the American people to respect the conditions placed on those funds.”

That duty, in the eyes of federal investigators, was not fulfilled.

Loren Sciurba, Deputy Inspector General at the Treasury Department, noted that the case reflects ongoing scrutiny of how pandemic-era funds were used and misused. “We remain steadfast in our determination to hold recipients of public funds to the highest standards,” he said.

To be clear, Delta did not admit liability as part of the settlement, and the agreement puts an end to the government's civil claims without any further litigation.

But the episode is another reminder that pandemic-era aid came with strings attached, and that watchdogs are still tugging on those strings to see who followed through.

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