The Obama Administration’s Defiance of the WARN Act

On July 30, 2012, the Department of Labor (DOL) issued guidance to defense contractors informing them that provisions of the WARN Act would not apply in regard to potential sequestration cuts.  The WARN Act requires companies with more than 100 employees to give workers notice of potential layoffs at least 60 days in advance.  Additionally, a September 28, 2012 Office of Management and Budget (OMB) guidance states that costs associated with any litigation that could come about by defense contractors failing to comply with the WARN Act would be covered by the federal government.

A Committee on Education and the Workforce letter, addressed to OMB Acting Director Jeffrey Zients and dated October 5, 2012, lays out serious concerns Chairman John Kline, Subcommittee on Health, Employment, Labor and Pensions Chairman Phil Roe, and Subcommittee on Workforce Protections Chairman Tim Walberg have with these recent actions of the OMB.  The letter raises serious questions about the legality of the guidance by pointing out inconsistencies in the logic used by the OMB: 

Pursuant to the OMB guidance, a contracting agency would ‘cover’ a contractor’s compliance… that results in WARN Act-related liability and costs – ‘irrespective of litigation outcome.’  This suggests OMB expects a federal court could find a contractor who does not issue sequestration-related WARN Act notices in violation of the law.

A joint statement from Senators John McCain, Lindsey Graham and Kelly Ayotte reacting to the OMB guidance to contractors was released on September 28, 2012:

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. The president should insist that companies act in accordance with the clearly stated law and move forward with the layoff notices.

In an October 9, 2012 article from National Review Online, Hans A. von Spakovsky states that: 

Refusing to follow federal law has become the hallmark of this administration, but the White House’s latest arrogant, unlawful ploy goes even further and may end up costing the American taxpayer a great deal of money.

As written, the sequester cuts hundreds of billions from defense spending and would result in the loss of thousands of jobs among defense contractors.  Moreover, the administration has placed the American taxpayer on the hook for the bill if any lawsuits are brought up against defense contractors for failing to comply with the law.  By sending mixed messages to defense contractors and the American people, President Obama has added to the increased uncertainty currently surrounding the sequester cuts.