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.
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.
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.”
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.
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.”