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Grassley, Ayotte Question Administration's Warn Act Guidance

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Senators Chuck Grassley (R-Iowa) and Kelly Ayotte (R-NH) are requesting information from the White House about new guidance from the Office of Management and Budget (OMB) that says the government will pay for legal costs related to lawsuits resulting from private-sector employers failing to give employees notice of possible layoffs due to sequestration. The Department of Labor told federal contractors this summer not to worry about complying with the federal labor law that requires notification.

The senators' inquiry involves the 1988 Worker Adjustment and Retraining Notification Act, known as the WARN Act, which requires large employers to send written notice to employees 60 days in advance of potential layoffs or plant closings.

In July, the Department of Labor issued guidance which said federal contractors potentially impacted by the budget sequestration scheduled to take effect on January 2, 2013, need not abide by the WARN Act requirement. Despite sequestration being the law of the land, the Department of Labor suggests the WARN Act doesn't apply because of uncertainty about whether sequestration will occur and how it would impact contracts. To date, the administration has failed to be transparent about the impact of sequestration.

Despite the message from the Department of Labor, federal contractors have considered providing notices in order to comply with the law. According to a news report last month, Lockheed Martin had said it might send notices to all 123,000 employees, for example. Under the WARN Act, if notice isn't provided, an employer is liable for paying back pay, benefits and attorneys' fees. If sent, notices would reach workers days before the presidential election in November.

On Friday, the OMB issued a memo that goes beyond the letter from the Department of Labor by apparently promising government payments for any lawsuits brought against employers who don't give WARN Act notices per the Department of Labor's instructions. After the OMB memo was released, Lockheed Martin said it won't send notices. Other contractors have not yet indicated what they will do.

"What the administration has done raises serious questions," Grassley said. "In our letter of inquiry, we're asking what authority the administration is using to say it is okay to disregard the law and commit to pay for monetary judgments and other expenses resulting from lawsuits. If workers aren't given the notice they're due, the costs could amount to billions of dollars for taxpayers. The public deserves answers and accountability without any delay."

"The President has prohibited the Pentagon from planning for defense sequestration and now cites this lack of specifics as the reason employers should ignore the WARN Act requirement. The Administration's new guidance tells employers to willfully ignore the law and stay silent about looming layoffs until after the election -- and promises them a taxpayer funded bailout for their legal expenses if they do so," Ayotte said. "The Administration must explain its legal basis for this interpretation of the WARN Act that leaves taxpayers on the hook, American workers in the dark, and our national security in jeopardy."

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