Commentary Magazine


Topic: WARN Act

Misplaced Priorities on Sequestration

Unless Congress acts before January 1, sequestration will kick in and the defense budget will be slashed some $50 billion across the board—the first stage of cutbacks which could total $1 trillion over the next decade. That is certain to have a severe impact not only on Defense Department employees, civilians, and military, but also on the defense contractors that produce the vehicles, aircraft, ships, missiles, ammunition, and everything else needed to equip the armed forces.

Under the 1989 WARN Act (Worker Adjustment and Retraining Notification) companies with more than 100 employees are obligated to give 60-days notice of mass layoffs and plant closings. Lockheed Martin threatened to send out those notices on November 2, four days before the election–and with many of them arriving in swing states such as Virginia. That would not be good for President Obama’s reelection chances so his Office of Management and Budget has alternatively bullied and bribed the defense contractors not to send out the layoff notices–the demands of the law notwithstanding.

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Unless Congress acts before January 1, sequestration will kick in and the defense budget will be slashed some $50 billion across the board—the first stage of cutbacks which could total $1 trillion over the next decade. That is certain to have a severe impact not only on Defense Department employees, civilians, and military, but also on the defense contractors that produce the vehicles, aircraft, ships, missiles, ammunition, and everything else needed to equip the armed forces.

Under the 1989 WARN Act (Worker Adjustment and Retraining Notification) companies with more than 100 employees are obligated to give 60-days notice of mass layoffs and plant closings. Lockheed Martin threatened to send out those notices on November 2, four days before the election–and with many of them arriving in swing states such as Virginia. That would not be good for President Obama’s reelection chances so his Office of Management and Budget has alternatively bullied and bribed the defense contractors not to send out the layoff notices–the demands of the law notwithstanding.

To follow up on Alana’s post yesterday, the latest news is that OMB has promised to pay severance costs for contractors if sequestration occurs—as long as they don’t send layoff notices in advance. This is about as flagrant an act of political manipulation—putting the demands of the president’s reelection campaign ahead of the demands of the law—as one can possibly imagine and it should be greeted with more public notice, and press outrage, than has been the case to date.

If only the Obama administration devoted a tenth as much energy to preventing sequestration as it does to preventing an immediate political hit from sequestration.

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OMB: We’ll Reimburse Employers for WARN Act Fallout

The Office of Management and Budget is now promising to compensate defense contractors for any legal penalties that would stem from violating the WARN Act, a federal law that requires employers to warn employees at least 60 days in advance of mass layoffs. The Obama administration had already been urging contractors to ignore the WARN Act in the case of the looming sequestration cuts, since the 60-day-minimum would mean hundreds of thousands of employees could get notices of pending layoffs just days before the presidential election.

But it’s one thing for the Obama administration to tell contractors that they shouldn’t worry about the law. It’s quite another to promise that the cost of any resulting lawsuits will be covered by the government (read: the taxpayers):

But the Friday guidance from the Office of Management and Budget raised the stakes in the dispute, telling contractors that they would be compensated for legal costs if layoffs occur due to contract cancellations under sequestration — but only if the contractors follow the Labor guidance.

The guidance said that if plant closings or mass layoffs occur under sequestration, then “employee compensation costs for [Worker Adjustment and Retraining Notification] WARN act liability as determined by a court” would be paid for covered by the contracting federal agency.

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The Office of Management and Budget is now promising to compensate defense contractors for any legal penalties that would stem from violating the WARN Act, a federal law that requires employers to warn employees at least 60 days in advance of mass layoffs. The Obama administration had already been urging contractors to ignore the WARN Act in the case of the looming sequestration cuts, since the 60-day-minimum would mean hundreds of thousands of employees could get notices of pending layoffs just days before the presidential election.

But it’s one thing for the Obama administration to tell contractors that they shouldn’t worry about the law. It’s quite another to promise that the cost of any resulting lawsuits will be covered by the government (read: the taxpayers):

But the Friday guidance from the Office of Management and Budget raised the stakes in the dispute, telling contractors that they would be compensated for legal costs if layoffs occur due to contract cancellations under sequestration — but only if the contractors follow the Labor guidance.

The guidance said that if plant closings or mass layoffs occur under sequestration, then “employee compensation costs for [Worker Adjustment and Retraining Notification] WARN act liability as determined by a court” would be paid for covered by the contracting federal agency.

There’s also a catch: employers have to agree to play by the “Department of Labor’s guidance” if they want any potential legal costs covered. The DOL’s guidance asks them not to send out layoff notices before the election.

That seems to have satisfied defense contractors. Today, Lockheed Martin announced it would not issue layoff notices in advance of the sequestration cuts. Where is the campaign media on this? The Obama administration just told defense contractors that taxpayers would pay for any legal penalties for not complying with a law that would have complicated Obama’s reelection campaign. Does that not warrant some scrutiny, or do we need a billionth article on Romney’s “47 percent gaffe” instead?

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Obama Was Champion of WARN Act in ’07

Yesterday, I wrote about how President Obama’s Department of Labor issued guidelines for dealing with the job losses from sequestration. The guidelines told employers not to provide workers with 60 days minimum notice of pending layoffs, as required by federal law. We don’t know what prompted the DOL’s unusual directive, but Obama most likely wants to avoid a scenario in which mass layoff notices are sent out just days before the presidential election.

It’s interesting that the Obama administration is suddenly so blase when it comes to enforcing employee protection laws, particularly because he was a champion of the 60-day minimum notice law — also known as the WARN Act — back in 2007.

“For too long, employers have failed to notify workers that they’re about to lose their jobs due to mass layoffs or plant closings even though notice is required by the WARN Act,” then-Sen. Obama said in a July 17, 2007  press release. “The least employers can do when they’re anticipating layoffs is to let workers know they’re going to be out of a job and a paycheck with enough time to plan for their future.”

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Yesterday, I wrote about how President Obama’s Department of Labor issued guidelines for dealing with the job losses from sequestration. The guidelines told employers not to provide workers with 60 days minimum notice of pending layoffs, as required by federal law. We don’t know what prompted the DOL’s unusual directive, but Obama most likely wants to avoid a scenario in which mass layoff notices are sent out just days before the presidential election.

It’s interesting that the Obama administration is suddenly so blase when it comes to enforcing employee protection laws, particularly because he was a champion of the 60-day minimum notice law — also known as the WARN Act — back in 2007.

“For too long, employers have failed to notify workers that they’re about to lose their jobs due to mass layoffs or plant closings even though notice is required by the WARN Act,” then-Sen. Obama said in a July 17, 2007  press release. “The least employers can do when they’re anticipating layoffs is to let workers know they’re going to be out of a job and a paycheck with enough time to plan for their future.”

During his 2008 presidential campaign, Obama also railed against loopholes that allowed employers to avoid complying with the law — which is basically what his DOL seems to be advising now.

“Now, I believe we must act at the federal level to close the loophole that allows employers to disregard the WARN Act without penalty,” he said in statement to the Toledo Blade.

As senator, Obama even cosponsored the 2007 FOREWARN Act, which would have extended the minimum notice to 90 days and increased both the penalties for violating the law and the government’s ability to enforce it.

Oddly enough, Democratic Sen. Sherrod Brown reintroduced the FOREWARN Act less than two months ago. Will Obama — who advocated for it during his last presidential campaign — express his support for it again? And will he tell his DOL to stop encouraging employers to dodge the WARN Act, which he insisted was so important when he was serving in the Senate?

Nobody wants employers and workers to worry about layoffs that may never happen. But the way to ensure that warning notices don’t go out unnecessarily is by dealing with sequestration before November and before the 60-day minimum window — not by telling employers to ignore the WARN Act and assume sequestration will be taken care of after the election.

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DOL: Delay Layoffs Until After Election

I’ve written before about the potential for a “November surprise” if the sequestration threat doesn’t get resolved before the election. The automatic cuts to the defense budget are set to go into effect on January 2, 2013, and federal law under the WARN Act required employers to give workers a minimum of 60 days notice before potential mass layoffs. That means layoff warning notices could go out to hundreds of thousands of workers just days before the presidential election.

Naturally, this poses some problems for the Obama campaign. Enter the Department of Labor, which released new guidelines this week telling states that it would be “inappropriate” to give workers 60 days advance notice in this situation, and basically asking them to ignore the employee protection laws under the WARN Act:

Although it is currently known that sequestration may occur, it is also known that efforts are being made to avoid sequestration. Thus, even the occurrence of sequestration is not necessarily foreseeable. In addition, the sequester’s impact on particular accounts will depend at least in part on Fiscal Year (FY) 2013 funding that Congress has not yet enacted. Perhaps more importantly, Federal agencies also have some discretion in how to implement the required reductions if sequestration were to occur. …

For these reasons, in the context of prospective across-the-board budget cuts under the BBEDCA, as amended by the BCA, WARN Act notice to employees of Federal contractors, including in the defense industry, is not required 60 days in advance of January 2, 2013, and would be inappropriate, given the lack of certainty about how the budget cuts will be implemented and the possibility that the sequester will be avoided before January.

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I’ve written before about the potential for a “November surprise” if the sequestration threat doesn’t get resolved before the election. The automatic cuts to the defense budget are set to go into effect on January 2, 2013, and federal law under the WARN Act required employers to give workers a minimum of 60 days notice before potential mass layoffs. That means layoff warning notices could go out to hundreds of thousands of workers just days before the presidential election.

Naturally, this poses some problems for the Obama campaign. Enter the Department of Labor, which released new guidelines this week telling states that it would be “inappropriate” to give workers 60 days advance notice in this situation, and basically asking them to ignore the employee protection laws under the WARN Act:

Although it is currently known that sequestration may occur, it is also known that efforts are being made to avoid sequestration. Thus, even the occurrence of sequestration is not necessarily foreseeable. In addition, the sequester’s impact on particular accounts will depend at least in part on Fiscal Year (FY) 2013 funding that Congress has not yet enacted. Perhaps more importantly, Federal agencies also have some discretion in how to implement the required reductions if sequestration were to occur. …

For these reasons, in the context of prospective across-the-board budget cuts under the BBEDCA, as amended by the BCA, WARN Act notice to employees of Federal contractors, including in the defense industry, is not required 60 days in advance of January 2, 2013, and would be inappropriate, given the lack of certainty about how the budget cuts will be implemented and the possibility that the sequester will be avoided before January.

This is an interesting about-face from the Department of Labor. In a statement yesterday, Sen. John McCain noted that the DOL previously argued that it has “no administrative or enforcement responsibility under [the WARN Act]” and “cannot provide specific advice or guidance with respect to individual situations.” Funny how a looming election crisis for the Obama campaign can change all that.

As McCain wrote in his statement, this advisory is a direct affront to American workers:

“At a time when our economy continues to suffer from staggeringly high unemployment, the Obama administration today took away an important planning tool for Americans who may lose their jobs as a result of the failure of Congress and the White House to address the looming and entirely predictable threat of budget sequestration. Sequestration is currently the law of the land, and our nation’s workers have a right to know how these sequestration cuts which begin in January may impact them.”

It would also make it less likely that sequestration will be dealt with before November, as there would be less urgency if the administration didn’t have to worry about mass layoff notices impacting Obama’s election chances.

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November Surprise?

Last week, I wrote about how the sequester will trigger the WARN Act, which requires employers to warn staff of pending layoffs a minimum of 60 days in advance. That means potentially hundreds of thousands of public and private sector workers would receive layoff warning notices on November 2 — 60 days before sequestration hits, and just five days before the presidential election.

Needless to say, this is a BFD for President Obama. So you may not be too shocked to learn that the administration might be pressuring employers to delay these notices until after Election Day. HotAir’s Tina Korbe flags this key item in Sen. Jim Inhofe’s floor speech last week:

“I have every reason to believe, because I’ve heard from people in industry, that the president of the United States is trying to get them to avoid sending pink slips out until after the November 7 election,” said Inhofe.  “I would remind him that we have something called the Workers Adjustment and Retraining Notification Act, the WARN Act.  It requires these companies to give 60 days’ notice of pending layoffs.

“Since sequestration will take place on January 2, these workers must be notified of their pink slip by November 2.  This is what I’d like to remind those companies:  they don’t have to wait. If they want to notify workers today, they can do that. I think it is imperative that the workers who are going to be laid off work as a result of the Obama Sequestration be notified in advance of the November election. We’re going to do everything we can to make sure that happens.”

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Last week, I wrote about how the sequester will trigger the WARN Act, which requires employers to warn staff of pending layoffs a minimum of 60 days in advance. That means potentially hundreds of thousands of public and private sector workers would receive layoff warning notices on November 2 — 60 days before sequestration hits, and just five days before the presidential election.

Needless to say, this is a BFD for President Obama. So you may not be too shocked to learn that the administration might be pressuring employers to delay these notices until after Election Day. HotAir’s Tina Korbe flags this key item in Sen. Jim Inhofe’s floor speech last week:

“I have every reason to believe, because I’ve heard from people in industry, that the president of the United States is trying to get them to avoid sending pink slips out until after the November 7 election,” said Inhofe.  “I would remind him that we have something called the Workers Adjustment and Retraining Notification Act, the WARN Act.  It requires these companies to give 60 days’ notice of pending layoffs.

“Since sequestration will take place on January 2, these workers must be notified of their pink slip by November 2.  This is what I’d like to remind those companies:  they don’t have to wait. If they want to notify workers today, they can do that. I think it is imperative that the workers who are going to be laid off work as a result of the Obama Sequestration be notified in advance of the November election. We’re going to do everything we can to make sure that happens.”

As Inhofe says, failing to send the layoff notices a minimum of 60 days in advance would be a violation of the WARN Act; and the last thing these companies want is a slew of employee lawsuits to compound their budget cuts. One thing is clear — if sequestration is to take place, the massive impact on the job market will be felt before the election. Potentially just days before.

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