Contrary to guidance issued by the White House last week, GOP Sens. Lindsey Graham (S.C.) and John McCain (Ariz.) urged 15 major government contractors today to issue layoff warnings in advance of automatic spending cuts set to begin next year.
The pair also vowed to block any effort to use government funds to cover any liability contractors may face over delaying the warnings, required under the Worker Adjustment and Retraining Notification Act. If contractors anticipate layoffs as of Jan. 2, 2013 — the day the so-called sequester is set to go into effect — they would need to issue layoff warnings just days in advance of the Nov. 6 election in order to comply with the 60-day notice provision.
“We plan to block any effort by the Administration to reimburse contractors who fail to provide the required WARN Act notifications,” the letter said. “We will oppose any requested funding increase in the budget process, any reprogramming action, including transfers that fall below the level requiring Congressional notification, or use of any program funds to reimburse contractors for any expenses resulting from failure to comply with the law.”
The warning comes after the White House had said government funds could be made available to help defray those costs.
“Despite the Administration’s guidance not to issue WARN notices now, it is our fear that, should you rely on that guidance and fail to comply with the WARN Act requirements, you will be setting your company up for serious legal and financial repercussions,” the letter continued. “The Congress should not put the taxpayers on the hook if a private company fails to follow the law.”
Currently $109 million in security and nonsecurity cuts, including $55 billion from defense, are set to go into effect into January, which could result in government contractors having to lay off workers. The cuts are part of the $1.2 trillion sequester over 10 years that was triggered by Congress’ inability to agree on a deficit reduction plan last year.
Under the WARN Act, employers with at least 100 employees are generally required to provide written notice to affected employees 60 days before ordering certain plant closings or mass layoffs if they are reasonably foreseeable.
However, the Office of Management and Budget said last week “that it is neither necessary nor appropriate for Federal contractors to provide WARN Act notice to employees 60 days in advance of the potential sequestration because of uncertainty about whether sequestration will occur and, if it did, what effect it would have on particular contracts, among other factors.”
Citing a policy letter issued by the Labor Department in July, OMB said, “Giving notice in these circumstances would waste States’ resources in undertaking employment assistance activities where none are needed and create unnecessary anxiety and uncertainty for workers.”
In an effort to help keep contractors from issuing notices, the OMB said that “liability and litigation costs associated with the WARN Act compliance” could be covered by the federal government.
The $109 billion of the sequester is scheduled to take effect Jan. 2, so any layoff notices would have to go out early next month, days before the Nov. 6 elections, which has sparked intensifying political rhetoric.
“We wholeheartedly believe that it is in no one’s best interest to create unnecessary anxiety in your workforce, and it is our hope that Congress and the Administration act as soon as possible to avoid the severe consequences of the sequester,” the letter said. “However, we are three months from the date sequestration is scheduled to take effect, and neither the Senate nor the Administration have put forward a plan to address the issue.
“Further, the Congress is not even scheduled to come back into session until the week of November 13,” the letter continued. “This leaves precious little time for a plan to come together. Despite efforts by the Administration to ignore the facts, sequestration and the WARN Act are the law of the land.”
The letter was sent to: Lockheed Martin Corporation, Raytheon Company, L-3 Communications Holdings Inc., Northrop Grumman Corp., Huntington Ingalls Industries, the Boeing Company, General Dynamics Corp., Honeywell International Inc., CSC, SAIC, BAE Systems Inc., ATK, ITT Exelis, EADS North America Inc. and United Technologies Corporation.