Published September 29, 2012
The Obama administration has doubled down on its plea to defense contractors not to warn employees about possible layoffs due to looming budget cuts -- going so far as to offer to cover legal fees in compensation challenges.
The move drew a stern rebuke Friday from South Dakota Republican Sen. John Thune, since federal law requires employers to give notice if mass layoffs are likely.
"For the second time, the Obama administration has now encouraged government contractors to ignore the WARN Act and hold off on warning employees about possible layoffs due to the looming sequestration cuts,” Thune, lead author of the Sequestration Transparency Act, said Friday.
The offer to pay the legal fees was included in a memorandum issued by the administration Friday that also restated the Labor Department's position from July that contractors should not issue written notices to employees because of the "uncertainty" over the across-the-board cuts to the defense budget and other federal spending that will occur Jan. 2 unless Congress reaches a new deal.
The notices are required under the Worker Adjustment and Retraining Notification Act and generally require employers with more than 100 employees to provide 60-day notices of "mass layoffs if they are reasonably foreseeable."
The projected $500 billion in Pentagon cuts under the so-called sequestration will occur because Congress failed to agree on a deficit-reduction plan this summer.
The guidance issued by the Labor Department this summer stated "it is neither necessary nor appropriate" for federal contractors to issue the warnings.
The memorandum states the federal government would cover employee compensation under the WARN Act – "irrespective of the outcome" as long as the contractor follows the Labor Department guidelines.
Still, defense contractor Lockheed Martin -- which might have to lay off employees should the cuts kick in -- is still considering whether to send out the notices, according to The Hill newspaper.
Rep. John Kline, chairman of the House Committee on Education and the Workforce, suggested last week that the Labor Department is trying to conceal the full impact of the cuts.
"The Labor Department is trying to hide the consequences of sequestration from workers," Kline, R-Minn., said in a letter to Labor Secretary Hilda Solis.
The letter was the second in two months by Republican committee leaders in which they asked for an update and more detailed information about the obligations federal contractors have in giving the advanced notice.
On Friday, Republican Sens. John McCain, Ariz.; Lindsey Graham, S.C.; and Kelly Ayotte, N.H., issued a similar statement, saying in part, "The president should insist that companies act in accordance with the clearly stated law and move forward with the layoff notices."
The Associated Press contributed to this report.