Disney to Furlough Staffers "Whose Jobs Aren't Necessary at This Time"

It's unclear how many employees will be affected when the process begins on April 19.

The Walt Disney Company will begin furloughing its employees as it grapples with the impact of park and store closures and delayed film releases as well as a downturn in TV advertising amid the novel coronavirus pandemic, the conglomerate said Thursday.

The Burbank-based media giant stated that staffers "whose jobs aren’t necessary at this time" will be furloughed as of April 19. The affected staffers "will receive full health care benefits, plus the cost of employee and company premiums will be paid by Disney," the company said.

Numerous divisions are expected to be hit, including Disney’s film empire, which comprises myriad labels as well as marketing and distribution and a host of operational units. Since the company closed its $71.3 billion acquisition of most of 21st Century Fox last year, there have been staff reductions in multiple divisions. Disney did not immediately respond to a request for comment.

Workers United Local 50 president Christopher Duarte, who represents food and drink castmembers at Disneyland, tells The Hollywood Reporter the furloughs may impact non-union hourly employees, which he estimated at around 10,000 workers for the Anaheim park. Disneyland executives are currently in talks with the union on how to proceed since union workers are protected from furloughs, Duarte says.

"We expect something is coming for the unions next," Duarte said in a letter on union members. "Union members not being included leaves us all with questions as to the future. We have reached out to the company and are scheduled to meet virtually with our Labor Relation representatives [Friday]."

In a letter Friday night, Duarte wrote that the company was proposing to also furlough all non-essential union members effective April 19. However, the company would continue all signature benefits, meaning health, dental, vision, life insurance, and EAP.

"At this point in the process the company is willing to pay the member contribution amount while a member is on furlough. Securing much needed medical benefits for all members that rely on Disney for health insurance during this pandemic," he wrote, adding nothing had been finalized and negotiations were still underway.

In a March 19 SEC filing, Disney listed the "extraordinary business challenges" facing the conglomerate due to COVID-19: "We have closed our theme parks; suspended our cruises and theatrical shows; delayed theatrical distribution of films both domestically and internationally; and experienced supply chain disruption and ad sales impacts."

"In addition," Disney warned in the filing, "there has been a disruption in creation and availability of content we rely on for our various distribution paths, including most significantly the cancellation of certain sports events and the shutting down of production of most film and television content."

On Monday, Disney disclosed that its top executives would be taking pay cuts on base salaries. Executive chairman Bob Iger will forgo his entire base salary, while CEO Bob Chapek will take a 50 percent pay cut on his salary (though not his entire compensation package).

Chapek said that there will be pay cuts at several levels for executives, noting in an email to staff that, "Effective April 5, all VPs will have their salaries reduced by 20 percent, SVPs by 25 percent and EVPs and above by 30 percent." In a subsequent filing on Monday, the company described the pay cuts as impacting "a broad group of its executive level employees."

The company's North American parks, including Disneyland in Anaheim and Disney World, have been shuttered until further notice. And all of its retail stores stateside have been closed since March 17.

Disney tentpoles, including its live-action Mulan and Marvel Studios' Black Widow, have been removed from the release calendar, as have 20th Century Studios films including X-Men title The New Mutants and the thriller Woman in the Window, as well as Searchlight's Antlers and The Personal History of David Copperfield.

With a blackout on moviegoing in the U.S. and much of the world — including China — the release pipeline at Disney, as well as the rest of Hollywood, has come to a standstill. Many don’t expect theaters box office traffic to resume in earnest until late summer.

The studio division has halted live-action production on its films, including Marvel’s Shang-Chi and The Legend of the Ten Rings, Disney's live-action The Little Mermaid and Shrunk, a sequel to 1989's Honey, I Shrunk the Kids. Production also shuttered on Searchlight's Ridley Scott drama The Last Duel and Guillermo del Toro’s Nightmare Alley.

And the company's ESPN division has had to rework its programming lineup as nearly all sports leagues have gone dark. The sports network, which has been airing movies, classic games and documentaries, is expected to take an advertising hit without the NBA and other major events.

Disney's full statement on Thursday is below.

The COVID-19 pandemic is having a devastating impact on our world with untold suffering and loss, and has required all of us to make sacrifices. Over the last few weeks, mandatory decrees from government officials have shut down a majority of our businesses. Disney employees have received full pay and benefits during this time, and we’ve committed to paying them through April 18, for a total of five additional weeks of compensation.

However, with no clear indication of when we can restart our businesses, we’re forced to make the difficult decision to take the next step and furlough employees whose jobs aren’t necessary at this time. The furlough process will begin on April 19, and all impacted workers will remain Disney employees through the duration of the furlough period. They will receive full healthcare benefits, plus the cost of employee and company premiums will be paid by Disney, and those enrolled in Disney Aspire will have continued access to the education program.

Additionally, employees with available paid time off can elect to use some or all of it at the start of the furlough period and, once furloughed, they are eligible to receive an extra $600 per week in federal compensation through the $2 trillion economic stimulus bill, as well as state unemployment insurance.

April 4, 8 a.m.: Updated with new details from the union.

April 3, 6 a.m.: Updated with comment from the union president.