Labor Department: Contractors should not send pre-sequester layoff notices

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Federal contractors should not send warnings of impending layoff notices to their employees in advance of a potential budget sequester in January, the Labor Department ruled Monday.
 
Such notices are not required under the 1988 Worker Adjustment Retraining Notification Act, and in fact are “inconsistent” with the law, according to a policy letter to state workforce agencies issued by Labor officials.
 
Contractors have expressed concern that the 1988 Worker Adjustment Retraining Notification Act, which requires companies to provide 60-day notice to employees of impending mass layoffs, might apply to a budget sequester that could slash federal agencies’ budgets. The Labor Department’s Employment and Training Administration  said it does not, largely because it’s still not clear yet -- and may not be clear until the last minute -- whether a sequester will be necessary.

The sequester, included in a deal last year to avoid defaulting on the government’s debt,  would kick in at the beginning of 2013 if members of Congress fail to agree on a long-term plan to address the federal budget situation before the end of 2012. It would require steep cuts in spending at the Defense Department and civilian federal agencies.

"Questions have recently been raised as to whether the WARN Act requires federal contractors—including, in particular, contractors of the Department of Defense -- whose contracts may be terminated or reduced in the event of sequestration on January 2, 2013, to provide WARN Act notices 60 days before that date to their workers employed under government contracts funded from sequestrable accounts,” the Labor letter stated. “The answer to this question is 'no.' In fact, to provide such notice would be inconsistent with the purpose of the WARN Act.”
 
If the WARN Act provisions did apply to the looming sequester, contractors would have been forced to send notices of potential layoffs just before this fall’s presidential election.
 
“Although it is currently known that sequestration may occur, it is also known that efforts are being made to avoid sequestration,” Labor officials said in their ruling. “Thus, even the occurrence of sequestration is not necessarily foreseeable.”
 
Even if a sequester were to go into effect, cuts that required the termination of federal contracts would be “sudden and dramatic,” and therefore would not require contractors to issue layoff notices under the WARN Act, the Labor Department ruled.
 
The purpose of the act is to provide workers the opportunity to get new jobs or seek assistance from state employment agencies, Labor officials said. “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.”
 
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