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Labor Dept. Pushes Back Against WARN Act Claims

Jul. 30, 2012 - 08:53PM   |  
By ZACHARY FRYER-BIGGS   |   Comments
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Speaking out against a chorus of CEOs who have warned of layoff notices set to be sent to defense company employees immediately before the election, the Department of Labor issued guidance July 30 stating that sending notices would be “inconsistent with the purpose of the WARN Act.”

The guidance, in the form of a letter signed by assistant secretary of employment and training administration Jane Oates, emphatically asserts that there is no need to send notices to employees about potential layoffs given the lack of clarity surrounding sequestration.

“In the absence of any additional information, potential plant closings or layoffs resulting from such contract terminations or cutbacks are speculative and unforeseeable,” the letter said.

Defense company executives have been vocally insisting that they would need to send notices to employees 60-90 days in advance of sequestration to comply with the Worker Adjustment and Retraining Notification (WARN) Act. The timing of the notices, November 2 for states that require 60 days, mere days from the election, has led to accusations that the notifications are a ploy to put pressure on politicians facing re-election.

Lockheed Martin CEO Bob Stevens has led the charge, repeatedly raising the possibility of WARN Act notices in interviews and during congressional testimony.

In a statement, Lockheed said it was reviewing the letter. “We are reviewing today’s Department of Labor guidance to assess its impacts on our obligations with respect to the WARN Act and potential sequestration,” the statement said.

Northrop Grumman CEO Wes Bush, who spent part of Thursday afternoon attending an event staged by the company as a protest against sequestration, said that the company still isn't sure whether it will need to issue notices.

“We're going to make that judgment when we need to make it, at the time when we have those facts available to us,” he said. “So we've not reached a firm conclusion yet, but I think simply saying you don't have to do it is perhaps not a fully considered position when it comes to recognizing the force of law.”

Some defense executives have voiced concern that the public emphasis on the notifications might hurt talent retention, and have privately questioned the logic of the strategy.

The act itself mandates that companies provide advance notice when an employee might loose his or her job in conjunction with broad company layoffs. The act doesn't require that each employee actually be fired, which would allow companies to notify large swathes of their worker pools to provide maximum flexibility for firings if sequestration occurs. DoD officials have said that if the notices are sent, they anticipate companies informing most of their employees.

The guidance from Oates stresses that if sequestration were to occur, it would be abrupt and therefore exempt employers from offering full notification of layoffs.

“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 letter said. “Employers now have virtually no information from which to determine whether their contracts will be affected, there is no basis on which to form a business judgment.”

House Armed Services Committee Chairman Howard “Buck” McKeon, R-Calif., released a statement calling the guidance “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,” he said in the statement. “As a result of Secretary Solis' politically motivated guidance, people will still get laid off because of the President's irresponsibility, but they won't have the notice to protect themselves and their families.”

In response to the potential for broad notifications well in excess of what companies will likely cut in the end, the guidance letter asserts that these types of notifications conflict with the intent of the WARN Act. “Nor is blanket notice consistent with one of the most important purposes of the WARN Act,” it said. “The WARN Act is intended to provide notice to workers who are reasonably expected to be affected by a plant closing or mass layoff so that they can have an opportunity to obtain a new job or at least lessen the impact of the employment loss that they will suffer.”

The letter further stresses the potential harm of excessive notification. “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. Both of those effects are inconsistent with the WARN Act’s intent and purpose.”

Vago Muradian contributed to this report.

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