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Obama administration to contractors: Hold off announcing layoffs until after the election and taxpayers will cover your fines and costs

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By Doug Powers  •  September 29, 2012 04:36 PM

**Written by Doug Powers

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According to the WARN Act, employers must provide 60 days notice to workers, labor union reps, local governments, etc., in advance of plant closings and mass layoffs that fall within the parameters of the Act.

Defense contractor layoffs due to sequestration cuts (that Obama is pictured above announcing in January of this year) are looming January 2, 2013. This means that federal law will require those companies to issue thousands of “you’re out of a job” notices mere days before the November election. If you’re the Obama administration this makes you more nervous than watching Joe Biden start to talk about Dunkin’ Donuts. What to do? Simple — ask the contractors to ignore the law and promise them that taxpayers will cover possible fines and extra costs associated with any subsequent non-compliance judgments:

The Obama administration issued new guidance intended for defense contractors Friday afternoon, reiterating the administration’s position that the companies should not be issuing layoff notices over sequestration.

The Labor Department issued guidance in July saying it would be “inappropriate” for contractors to issue notices of potential layoffs tied to sequestration cuts. But a few contractors, most notably Lockheed Martin, said they still were considering whether to issue the notices — which would be sent out just days before the November election.

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.

Read the memo for yourself (PDF). The federal government is offering to pay companies to violate federal law so as to not spoil one man’s re-election by exposing him to the fallout from the implementation of his own plan, and it’s all right there in an official memo for all to see (transparency promise: delivered).

Republicans so far have responded with the obligatory “strongly worded statements”:

Senate Republicans, who accused the White House of trying to hide job losses after the first guidance, said Friday that the new OMB statement “puts politics ahead of American workers.”

“The Obama Administration is cynically trying to skirt the WARN Act to keep the American people in the dark about this looming national security and fiscal crisis,” Sens. John McCain (R-Ariz.), Lindsey Graham (R-S.C.) and Kelly Ayotte (R-N.H.) said in a statement. “The president should insist that companies act in accordance with the clearly stated law and move forward with the layoff notices.”

Politics ahead of American workers? It puts politics ahead of the law.

And if the administration is as certain as they want to appear that these contractors are the few exceptions outlined in the WARN Act, then why does whoever wrote the memo seem resigned to the fact that a court would rule otherwise?

Specifically, if (1) sequestration occurs and an agency terminates or modifies a contract that necessitates that the contractor order a plant closing or mass layoff of a type subject to WARN Act requirements, and (2) that contractor has followed a course of action consistent with DOL guidance; then any resulting employee·compensation costs for WARN Act liability as determined by a court, as well as attorneys’ fees and other litigation costs (irrespective of litigation outcome), would qualify as allowable costs and be covered by the contracting agency, if otherwise reasonable and allocable.

It’s been asked: This is a big deal. So why isn’t it on the front page of every major newspaper in America?

It’s a sad state of affairs because it never even occurs to me to ask that question anymore. Besides, major newspapers these days have more important stories to put on the front page this year.

(h/t Instapundit and Ed Morrissey)

**Written by Doug Powers

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