Wednesday, October 10, 2012

UPDATE: As Election Nears, White House Promises to Indemnify Contractors Who Don’t Follow WARN’s Notice Requirements

We recently published a post about how the Department of Labor issued a guidance letter advising federal contractors not to comply with the WARN Act’s notice requirements, even though there are signs that federal budget cuts could result in more than 2 million job losses.  Some observers were quick to note that the millions of notices of potential job losses would have to be mailed to workers by November 2, suggesting that the White House is simply trying to rein in this potentially devastating development until after the election.

In a move sure to add more fuel to that fire, the White House Office of Management and Budget last week took things a step further, offering to pay the costs and fees incurred by federal contractors who are sued for failing to provide the required WARN notices.

In a memorandum dated September 28 (here), the OMB offered to cover any employee compensation costs, attorneys’ fees, and other litigation costs incurred by contractors who (1) actually experience a mass layoff or plant closing attributable to the federal budget cuts and (2) followed the DOL’s earlier guidance that they should not send the required WARN notices because, in DOL’s estimation, the likelihood of budget cuts was too speculative.

While the OMB’s memo gives federal contractors some assurance that the government will provide them with a “bail-out” as long as they toe the current administration’s line, there is still much uncertainty because the issue of whether there actually will be budget cuts remains unresolved.  Also, the OMB’s guidance does nothing to address the concerns related to liability under state WARN-type acts.  Numerous states have their own versions of WARN that may require different or additional actions by employers.  Failure to follow those laws could result in liability that the federal government simply isn’t willing to absorb.

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