Airbnb will give laid-off employees 14 weeks base pay and health insurance, but millions of other laid-off workers are not so lucky
Typically, severance packages are based on how many years an employee has worked at a company. Airbnb is offering all laid-off employees at least 14 weeks of pay
The 1,900 employees Airbnb announced it is laying off on Tuesday will be leaving the company with an unusually generous severance package.
U.S. employees who are laid off, amounting to 25% of the company’s workforce, will receive “14 weeks of base pay, plus one additional week for every year at Airbnb,” CEO Brian Chesky, said in a note to employees. They will also have 12 months of health insurance paid for by the company through COBRA. For employees outside the U.S., Airbnb will cover their health-insurance costs “through the end of 2020.”
Airbnb’s decision to offer all employees 14 weeks of base pay regardless of how many years they’ve been with the company is, however, unusual.
“While we know Airbnb’s business will fully recover, the changes it will undergo are not temporary or short-lived. Because of this, we need to make more fundamental changes to Airbnb by reducing the size of our workforce around a more focused business strategy,” Chesky said. (Airbnb declined to comment further.)
In 2019, companies offered an average of 1.1 weeks of severance per year of service, with an average payout of 19.4 weeks of severance total, according to a survey released last year of 10,000 job seekers conducted by Challenger, Gray and Christmas, a Chicago-based outplacement and career-transitioning firm.
Typically, severance packages are tied to years of service, Challenger said. Within the hospitality and travel sector, average severance was about 2 weeks pay per year of service and 19 weeks total.
Some 30 million Americans have filed for unemployment benefits in the weeks since the coronavirus pandemic took hold in the U.S. and businesses began shutting down. Private-sector companies lost 20.2 million jobs in April amid the coronavirus crisis, according to data released Wednesday from Automatic Data Processing Inc. Service-producing industries slashed 16 million jobs in April, led by a 8.6 million decline at hotels and restaurants. Retail and transportation also lost 3.4 million positions.
Airbnb’s decision to offer such a generous package is an “investment in goodwill to hopefully hire them back once demand returns,” said Andrew Challenger, vice president of Challenger, Gray and Christmas. Additionally, it is a way for both parties to make a clean break, he added.
“The jobs disappeared but the company wants to take care of employees who helped build it,” he said. Also, if Airbnb employees accept the severance package, they “forfeit their ability to litigate the termination decision,” he noted.
On Wednesday, Uber Technologies Inc.
also announced it is laying off 3,700 full-time employees in customer-support and recruiting roles as the company deals with a steep drop-off in ride volume due to COVID-19 and proceeds with a hiring freeze.
The company’s CEO, Dara Khosrowshahi, plans to forgo his base salary, which was $1 million in 2019, for the rest of the year, according a filing with the Securities and Exchange Commission. The company did not publicly disclose allotments for laid off employees’ severance pay. But it said it expects to “incur approximately $20 million related to severance and other termination benefits.”
Marriott International Inc.
has also trimmed its workforce in response to the plunge in global travel amid the coronavirus pandemic. Unlike Airbnb and Uber, Marriott furloughed around two-thirds of its 4,000 corporate employees.
The hotel chain said it plans to bring back these workers once bookings return to pre-coronavirus levels. The majority of furloughed employees will also be receiving health-care benefits, but they will not be receiving a paycheck. However, they are still eligible for unemployment benefits.
Airbnb’s generous severance package helps boost its reputation, said Julie Schweber, a senior knowledge adviser at the Society for Human Resource Management (SHRM).
“It demonstrates that they treated people with respect and dignity, and people don’t forget that,” she said, applauding Airbnb’s actions. “When layoffs are done right folks may love coming back if things change.”
On top of the severance pay and health insurance, laid-off Airbnb employees are also being allowed to keep their Apple
laptops, the company said, stating that the computers are “an important tool to find new work.”