Tribe, casino announce changes to employee compensation
Friday 10th April 2020
Harrah's Cherokee Casinos announced April 1 that its COVID-19-induced closure would extend through the end of the month, and that same day Principal Chief Richard Sneed issued his own announcements about changes to compensation for tribal employees in the weeks ahead.
The casinos in Cherokee and Murphy generate the majority of revenues for the tribal budget and will have lost six weeks' worth of business by the time this is over -- if, that is, the closure is not extended again. When it reopens, business will likely resume at much lower levels than typical as Americans continue to struggle with unemployment and the economic engine works to get into gear.
Currently, all casino and tribal employees are receiving pay and benefits despite not being at work, with tribal employees in essential positions receiving double pay for remaining at work. However, as of April 16 most casino employees will be placed on furlough. They will no longer receive a salary but will continue to receive medical benefits through reopening or June 30, whichever comes first.
Tribal secretaries have been tasked with keeping the number of employees working to a bare minimum -- currently about 12 percent -- with those employees working very limited hours, Sneed said in a video posted April 1. As of April 12, those employees who are working will receive time and a half for their labor, not double time, with the remaining employees continuing to receive salary and benefits.
However, if the shutdown continues through April 26, employees who are still working will be compensated at their regular rate of pay and nonessential employees will receive 85 percent of their typical salary. However, these employees will be able to use accrued sick leave and annual leave to make up the difference and will continue to accrue new leave at the same rate they would if they had been working.
"As with all things financial, there's not just this unlimited open-ended cash flow, and obviously now we don't have revenue coming in from the casino with it being shut down as well," said Sneed.
Overall, he said, the tribe is in a solid financial position to weather the storm, but the unknowns surrounding how long the shutdown will last and what business as usual will look like once it ends require making these changes now.
"If this goes on for a long period of time, what's going to be painful is fiscal year '21," he said. "So we do have cash reserves now. We want to preserve those cash reserves to make up for the shortfall that inevitably is going to come because we don't have gaming revenue coming in."
In a follow-up video posted April 3, Secretary of Finance Cory Blankenship explained that there's need for caution, but not for panic. Because the tribe based its current budget on 80 percent of casino projections, the casino can miss projections by about $40 million without impacting tribal operations.
"Financially, the tribe is in a solid position to be able to weather that storm and to actually provide assistance to tribal members as well as to local business in getting through this particular crisis," he said. "It's interesting that the circumstances nobody could have predicted, but honestly we couldn't have been better prepared for this situation from a finance perspective."