No WARNing

The WARN Act is supposed to protect workers from unexpected layoffs, by requiring 60 days' notice of planned facilities closings.  A couple of months back, someone in the Obama administration noticed that the timing of the impending sequestration is such that the WARN Act would require notices to go out just before the election to many, many voters who happen to work for defense contractors -- can't have that!  So the Department of Labor issued advisories that under the, er. special circumstances, the WARN Act didn't apply, because, election.

The defense contractors thought about it for a while and decided that it might not be safe to rely on the Labor directive, since workers would have a right to sue under the plain terms of the Act.  So the OMB has stepped up:  now they're promising to indemnify the employers against not only the legal fees they will incur but also the amount of any judgment rendered against them.  Using taxpayer money.  Is the purpose to delay bad news until after the election?  No, the OMB explains that issuance of an unwelcome WARN notice would
waste States' resources in undertaking employment assistance activities where none are needed and creaty unnecessary anxiety and uncertainty for workers.
Including PTSD, no doubt.  It remains to be seen whether the employers will fall for it.  There are public policy restrictions on indemnifying people against the consequences of deliberate violations of law, and it's a big gamble, anyway, on the perserverence of these hacks in their  present positions of authority to dispense goodies from the public funds for their personal benefit.

I'm most interested to see if the White House will figure out a way to impose penalties on employers who decide to play it safe and send the notices anyway.  Penalties, that is, in addition the withhold of their bribe.


E Hines said...

...promising to indemnify the employers against not only the legal fees they will incur but also the amount of any judgment rendered against them.

This, of course, leaves the judgment itself intact....

Although not couching them explicitly as WARN Act notices, Sikorsky has gone ahead and sent the notices, and announced the closing of a plant in New York, as a result of the impending cuts. Boeing has sent a few explicitly WARN notices, also.

Not all the contractors are buying into this dishonesty. Not completely.

Eric Hines

Grim said...

NB that the OMB guidance says that contractors "would be compensated for legal costs if layoffs occur due to contract cancellations under sequestration — but only if the contractors follow the Labor guidance."

If you obey the law and incur similar costs, that's your out of pocket loss. Only those who break the law, in accordance with administration guidance, will be paid off at taxpayer expense.

MikeD said...

Well, the other part of the calculation those contractors will need to face is that the next Administration's DoL may not take so rosy a view on having the taxpayer pay indemnities for violations of the WARN Act. After all, SecLabor changes with the Administration.

Also, I'm curious how the carrot really applies. They will face indemnities if they violate the WARN Act, and DoL is saying the taxpayers will foot that bill IF the contractors violate the Act. But what indemnities will the contractors face if they follow the law? Where's the incentive for them to violate it? "If you break the law for us, we'll pay any bill that might result from that law breaking... assuming we win and are still in charge... and assuming we legally can spend the taxpayers money to indemnify you."

Were I a contractor, I'd play it safe and follow the law.