July 31, 2012
Credit: Credit: Architect of the Capitol
Companies may not have to send employees a warning of potential layoffs because of possible across-the-board budget cuts next January, according to the U.S. Department of Labor.
Under the Worker Adjustment and Retraining Notification (WARN) Act, companies with more than 100 employees are required to send out notices at least 60 days before potential layoffs or plant closings.
Given the potential for a $1 trillion government-wide “sequestration” cut, Lockheed Martin and other defense companies have been preparing to issue WARN Act notices, and they would be due to arrive in thousands of mailboxes just days before the November elections.
But a July 30 advisory from Jane Oates, assistant secretary of employment and training administration, to state workforce agencies casts doubt on whether the pink slips will have to be issued.
“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.”
But that interpretation hinges on uncertainty. Even though sequestration may occur, the government is trying to avoid it, and “perhaps more importantly, federal agencies may have some discretion in how to implement the required reductions,” Oates says.
“If Federal agencies announce before January 2, or in the wake of sequestration, specific contract terminations or cutbacks that will require contractors to lay off or separate their employees in less than 60 days, such Federal announcements would be sudden and dramatic, and in such cases, consistent with the WARN Act, employers will not have to provide the full period of notice,” the advisory says. “Many such Federal agency decisions may also occur later than January 2, as these agencies, including DOD, will need time to determine how to operate ongoing programs, projects, and activities for the remainder of FY 2013 within the constraints of any sequestration order.”
The House Armed Services Committee (HASC) is already pushing back against the guidance, calling it politically motivated and saying that companies are not likely to be protected — particularly from civil lawsuits — if they fail to notify their employees in time.