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Statement by Senators McCain, Graham and Ayotte on Obama Administration Guidance on Sequestration Layoff Notices


Location: Washington, DC

U.S. Senators John McCain (R-AZ), Lindsey Graham (R-SC) and Kelly Ayotte (R-NH) released the following statement on Obama Administration guidance issued today instructing defense companies and other government contractors not to issue mass layoff notices to their employees, as is required under the WARN Act, in anticipation of the $109 billion in across-the-board budget cuts scheduled to occur under sequestration on January 2, 2013:

"Today, President Obama put his own reelection ahead of the interests of working Americans and our national security by promising government contractors that their salary and liability costs will be covered at taxpayer expense if they do not follow the law that requires advance warning to employees of jobs that may be lost due to sequestration.

"The WARN Act exists to protect workers by providing at least 60 days' notice of layoffs from government contracting work. But today, the Office of Management and Budget published guidance for the defense industry and other government contractors that they do not have to provide that notice now even though, under current law, $109 billion in across-the-board budget cuts scheduled to occur on January 2 are estimated to result in as many as 1 million lost defense jobs.

"Apparently, President Obama puts politics ahead of American workers by denying them adequate time to plan their finances and take care of their families. The people who work in the defense industry and other government contracting companies deserve as much notice as possible that they are on track to lose their jobs.

"As a result of the OMB guidance, the Department of Defense will have to allow companies to claim repayment for the salaries of workers who are laid off but did not receive the required WARN notices -- a cost to the taxpayer that could be as much as $4 billion. In addition, DOD will have to reimburse companies for any legal damages paid to workers who are laid off but did not receive the required WARN notices -- a cost that is inestimable.

"Facing intense lobbying by defense companies and other government contractors for financial protection if they agreed not to issue WARN notices, the Obama Administration is giving contractors a free pass and will have potentially stuck the taxpayers with a multi-billion dollar campaign contribution.

"We also have questions regarding the legal authority of OMB to interpret the WARN Act as it has, and to obligate the Federal government to pay billions of dollars of potential claims from private contractors arising as a result of this interpretation.

"The Obama Administration is cynically trying to skirt the WARN Act to keep the American people in the dark about this looming national security and fiscal crisis. The president should insist that companies act in accordance with the clearly stated law and move forward with the layoff notices. Republicans and Democrats in Congress, as recently as three days ago, called on the president to work with us to avert the looming threat of sequestration to our national security."

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