WASHINGTON [updated 6:45 pm with Rep. Smith and AIA comment]: The Labor Department issued guidance today stating that defense companies and other federal contractors do not need to issue layoff notices sixty days in advance of sequestration. House Armed Services Chairman Buck McKeon immediately denounced the guidance as “politically motivated,” and his staff called it legally unsound.
Labor’s legalese boils down to this: It’s uncertain that sequestration will even occur, let alone what specific contracts will be affected, so “[any] potential plant closings or layoffs resulting from such contract terminations or cutbacks are speculative and unforeseeable” — which means that sending out WARN notices at this point would be not merely unnecessary but an abuse of the law in the form of “overbroad notice.”
[Updated 6:45 pm: “This is an important and correct interpretation of the law,” said HASC’s senior Democrat, Rep. Adam Smith, in a press release Monday evening. “There is no reason to needlessly alarm hundreds of thousands of workers when there is no way to know what will happen with sequestration.” That said, Smith went on, “I am fully committed to ensuring that it does not become the law of the land.”]
A HASC staffer told Breaking Defense that Labor should not be in the business of issuing such guidance in the first place: The Labor Department’s own online factsheet about the WARN Act ends with the specific statement that “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.” An industry official agreed that Labor could appropriately make rulings on regulations but not on matters of law, which are reserved for the courts.
Even if it were taken as authoritative, the Labor Department’s guidance is silent on two issues of concern, the HASC staffer said. First, “the guidance does not speak to the issue of any civil liability contractors might face” for failing to provide proper notice under the WARN Act, said the staffer. “If an employee lost their job come January 2nd, they might still have a case.” Second, “the guidance doesn’t address the issue of allowable contract costs,” which created a dispute between the Pentagon and Lockheed Martin in the past when Lockheed decided not to send out WARN notices to employees on the canceled presidential helicopter program, the VH-71.
“This document isn’t going to do much in terms of clarifying the situation,” concluded the HASC staffer. “All that I think it’s going to do is create more uncertainty.”
The defense industry was boggled by the news. “Thanks for making my afternoon,” said one industry insider.
[Updated 6:35 pm: Aerospace Industries Association vice-president Cord Sterling told Breaking Defense, “We have just received the memo from the Department of the Labor and we are currently having our counsel analyze it to determine what it means.”]