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Obama administration pushes back at defense layoff threats
The Obama administration slapped at defense contractors on Monday, saying threats to issue layoff notices before the election because of pending Pentagon cuts is "inappropriate."
Lockheed Martin CEO Bob Stevens first made the high-profile threat last month that his company would have to issue 123,000 layoff notices to all its employees right before the November elections because of federal reporting requirements in the Worker Adjustment and Retraining Notification (WARN) Act requiring 60 days' notice for layoffs.
But the new guidance from the Labor Department on the WARN Act says it would be “inappropriate” to send out layoff notices due to the potential $500 billion in defense cuts 60 days prior to sequestration's start date of Jan. 2 — which would cause the notices to be sent out just days before the Nov. 6 elections.
“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,” the Labor Department said.
The sequestration cuts have become an election issue in congressional and the presidential campaigns, with candidates increasingly focusing on the jobs angle of the cuts.
House Armed Services Chairman Buck McKeon (R-Calif.) responded by calling the guidance from the Obama administration “politically-motivated.”
“Instead of working to bring his party in the Senate to the negotiating table to resolve sequestration, the president is focused on preventing advance notice to American workers that their jobs are at risk and on perpetuating uncertainty,” McKeon said in a statement. “As it stands, the only certainty we are dealing with is that dramatic cuts will force huge job losses.”
The statement from McKeon, who blames Obama for sequestration being law, essentially takes the oppososite view of the committee's ranking member Adam Smith (D-Wash.), who says Congress is the reason the measure is on the books.
“This is an important and correct interpretation of the law,” Smith said in a statement. “There is no reason to needlessly alarm hundreds of thousands of workers when there is no way to know what will happen with sequestration.”
Cord Sterling of the Aerospace Industries Association, which issued the study this month warning of the job losses, said the trade association’s legal counsel is reviewing and analyzing the new Labor guidance.
Sterling said that AIA was also seeking to “reconcile” the new guidance with a prior Labor fact sheet on the WARN Act that says: “The Department of Labor, since it has no administrative or enforcement responsibility under WARN, cannot provide specific advice or guidance with respect to individual situations.”
The new guidance, issued by Assistant Labor Secretary Jane Oates, makes several arguments against issuing the notices that Stevens had threatened.
The guidance points to the preamble of the WARN Act, which states “it is not appropriate for an employer to provide blanket notice to workers.”
The Labor Department says that because businesses will not know how the sequestration cuts will affect specific contracts, they would not yet be able to point to specific plants that would need to be closed, and generalized notices are not consistent with the WARN Act.
“To give notice to workers who will not suffer an employment loss both wastes the states’ resources in providing rapid response activities where none are needed and creates unnecessary uncertainty and anxiety in workers,” the Labor Department says. “Both of those effects are inconsistent with the WARN Act’s intent and purpose.”
The guidance says the sequestration cuts would constitute an “unforeseeable business circumstance,” one of three exceptions to the 60-day layoff notice rule.
“Although it is currently known that sequestration may occur, it is also known that efforts are being made to avoid sequestration,” the guidance states. “Thus, even the occurrence of sequestration is not necessarily foreseeable.”
This story was updated at 4:51 p.m. and 9:02 p.m.
