Last week, MGM Resorts International reported during its first-quarter earnings call that the company furloughed nearly 63,000 employees while its casinos are closed due to the global COVID-19 outbreak.
Yesterday, May 5, MGM sent many of its employees a legal notice informing them they could ultimately be out of work for more than six months, or even lose their jobs permanently. MGM’s legal notice specifies that employees who are eligible to received health benefits through June 30 would have their coverage extended to August 31.
Advanced Notice of Mass Layoffs Required by Law
MGM’s advanced notice to its employees of potential layoffs is required for a company of its size due to the Worker Adjustment and Retraining Notification (WARN) Act of 1988.
Under the WARN Act, a company with 100 or more full-time employees (or a company with 100 or more employees whose hours worked per week exceeds 4,000 hours in total) is required to provide a 60-day notice to workers before enacting a mass layoff.
MGM Employees May Leave Prior to Layoffs
The possibility of mass layoffs is never comforting news to employees of any company, but the forewarning provides furloughed workers with an opportunity to pursue career opportunities elsewhere. However, these layoffs come at an unprecedented time in the casino and gaming industry.
Unlike a situation in which one company enacts mass layoffs due to its business failures, MGM’s competitors are facing similar challenges amidst the global pandemic. Employers don’t know when they’ll be permitted to reopen their properties and casino floors. Accordingly, many service workers and employees don’t know when they’ll be able to return to work.
For furloughed employees considering leaving their current employer, there’s no way to know which companies would be able to hire them once casinos reopen.
Travel Industry Woes Slow Recovery
Tight restrictions on travel are preventing international gaming hotspots like Macau from welcoming back foreign visitors at pre-pandemic rates. As cities in the U.S. begin to reopen, casinos will remain closed until receiving approval from their respective state-level Gaming Control Board. In Nevada, for example, casinos are required to adhere to guidelines outlined in a new Health and Safety Policy.
The uncertainty of when it will be “safe” to return to casinos creates added pressure for companies to outline what measures they are willing to take if their properties are required to remain closed. If the travel industry recovers slowly, companies will be cautious in returning their furloughed staff back to normal working hours.
Bill Hornbuckle, the Acting CEO and President of MGM Resorts, said that the company will continue providing grants to employees who are struggling to pay expenses like rent, utilities, and groceries.