Counsel retained by NJASAP confirms validity of IRS-mandated change to crewmember meal allowance

(Feb. 19, 2010) – Earlier today, NetJets advised the pilot group of an IRS-mandated change whereby the Company will be required to withhold applicable taxes from crewmember meal allowance payments on duty days in which the pilot receives three or more crew meals. Conversely, taxes will not be withheld from per diem payments on those duty days in which fewer than three crew meals were received. The announcement was accompanied by a FAQ to provide crewmembers with additional guidance.

When NJASAP was advised of the potential change to the crewmember meal allowance policy, we consulted with local legal advisers who specialize in tax law. In their joint memo, Brickler and Eckler Associates Jerry O. Allen and Meredith K. Knueve made the following conclusion:

“Under the court cases and Service authorities discussed below, in order for NetJets to secure a ruling that it is not required to tax or reduce its per diem allowance by the value of in-kind meals provided to crewmembers, NetJets must show that it has a reasonable belief that crewmembers actually incur meal or incidental expenses in excess of the per diem that are not reimbursed. Because three meals per day is the commercial norm, it would appear that NetJets can only demonstrate that it has a reasonable belief that its crewmembers will incur unreimbursed meal and incidental expenses by only providing two meals per day. Thus agreeing to a tax ruling on such basis appears to be reasonable.”

The conclusion is based on current tax law and court rulings regarding this particular subject area; click here to review the memo.

Although this constitutes a change in the status quo, it is, from all indications, a legitimate modification required by the IRS. Should you have any questions about this matter, please do not hesitate to contact the NJASAP Contract Administration Team.

FMLA amendment changes eligibility guidelines
Published Jan. 8, 2010

Newly signed legislation amending the Family and Medical Leave Act (FMLA) of 1993 modifies the minimum number of hours a pilot must fly each year to qualify for FMLA; the annual minimum was previously 1,250 hours. The law closes a loophole that, because of the way in which some air crewmembers’ hours are calculated, effectively excluded more than 200,000 flight attendants and pilots from FMLA coverage. Additionally, the economic downturn has led to a dramatic reduction in flight demand, which resulted in a corresponding decrease in flight time accumulation, preventing pilots from logging the requisite number of hours to achieve FMLA eligibility.

In response, Congress passed and President Obama signed the Airline Flight Crew Technical Corrections Act on Dec. 21, revising benefit guidelines for flight attendants and airline pilots. According to the Act: 

“ … a flight attendant or flight crewmember will be considered to meet such FMLA requirement if he or she has worked or been paid for:

(1) at least 60% of the applicable total monthly guarantee (contractual salary amount), or the equivalent for the previous 12-month period for or by the employer with respect to whom such leave is requested; and

(2) a minimum of 504 hours (not counting personal commute time spent on vacation leave or medical or sick leave) during such period.”

The modified standards will compel the Company to approve the FMLA claims of those flight crewmembers who meet the same; prior to the modification, the Company had denied claims. To that end, any pilot who has recently been denied an FMLA request based on the pre-Dec. 21 hourly requirement but is still seeking leave should contact NJASAP Associate Counsel Troy Beynon.