Case in point: the potential, looming cuts in Defense contractors due to sequestration. Let me explain. The Worker Adjustment and Retraining Notification (WARN) Act (29 U.S.C. §§ 2101-2109) requires employers with over 99 employees to provide written notice to affected employees 60 days prior to plant closures or mass layoffs*. So if Congress fails to avoid sequestration from kicking in on January 2, 2013, these notices will be required by law to be given to the affected employees on November 3, 2012. Three days before the 2012 election. According to a Department of Labor memo sent to the Chief Financial Officers and Procurement Executives at federal agencies, the DoL has concluded that:
...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.
Whoa. Seriously? Let's break that apart:
1. Waste unemployment assistance activities where none are needed? Why? If sequestration occurs, and as the letter states, it affects contracts such that large layoffs are required, why would unemployment assistance not be needed? Does the Obama Administration not care about federal government contractors? or maybe they think with the 8% (really more like 14-16%) unemployment status, there are enough job openings for these people to get work quickly with minimal impact to them?
2. Create unnecessary anxiety and uncertainty for workers? This has been the hallmark of the Obama Administration so why change things now. Obamacare was a black box of regulations, fines, taxes, fees, etc. and only when it was passed almost 3 years after its beginnings did we learn what was actually in it. Sequestration itself and what will happen is already causing anxiety and uncertainty but President Obama has done NOTHING towards fixing it. He has not met with industry leaders. He has barely met with his cabinet members. He has not done anything with those in Congress towards addressing this issue. Who is causing the uncertainty again?
So what is the guidance from the DoL - well, all the good companies will toe the line and not issue these U.S. legally required notices and if they get sued for compensation by employees affected by layoffs due to sequestration impacts, the federal agencies will cover those costs as allowable expenses under their individual contracts. In other words, go ahead and break the law and even though sequestration is aimed at trimming federal spending, we'll allow the resulting lawsuit expenses and compensations to be included in the federal spending even though we could avoid them by following the law. If you don't believe me - go check out the PDF of the memo. The relevant paragraph is:
Specifically, if (1) sequestration occurs and an agency terminates or modifies a contract that necessitates that the contractor order a plant closing or mass layoff ofa type subject to WARN Act requirements, and (2) that contractor has followed a course of action consistent with DOL guidance; then any resulting employee· compensation costs for WARN Act liability as detennined by a court, as well as attoroeys' fees and other litigation costs (irrespective of li tigation outcome), would qualify as allowable costs and be covered by the contracting agency, if otherwise reasonable and allocable.
The rumors are that Romney is going to pounce on Obama's lies, misleadings, and other diversions and use them as a means of showcasing the failures of the Obama Adminstration and how Romney would address such things. I'm hoping that Romney uses this as an example where Obama is clearly trying to kick the can down the road past the election in a desperate attempt to keep in office at the expense of the American workers and taxpayers.
* Note - GorT has been with a company that has done this: in the early 1990s, IBM had a major contract for the FAA to revamp and upgrade much of the air traffic control IT systems. The later portions of the contract were cancelled or severely scaled back and IBM laid off a fair amount of the staff. GorT continued at IBM and left of his own accord shortly thereafter.