Obama Administration Tells Contractors Facing Sequestration to Not Warn Employees About Potential Layoffs

http://www.forbes.com/sites/gregorymcneal/2012/09/30/obama-administration-tells-contractors-facing-sequestration-to-not-warn-employees-about-potential-layoffs/

The Obama Administration issued a memorandum (White House link) late Friday, instructing Federal contractors that they should not provide WARN Act notice to employees facing sequestration.  The WARN Act  is designed to protect “workers, their families, and communities by requiring most employers with 100 or more employees to provide notification 60 calendar days in advance of plant closings and mass layoffs.”  This White House directive follows a July 30, 2012 guidance letter from Jane Oates an Assistant Secretary at the Department of Labor, who concluded that no notice was necessary, specifically stating “As long as the likelihood and timing of contract cancellations remains speculative, an employer is not obligated to provide WARN notifications.”

While the Department of Labor guidance was consistent with existing precedent, it seems to be inconsistent with The WARN Act Guide for Employers, issued by the Department of Labor.  That guidance provides only three exceptions to a WARN Act notification.  The exceptions are: 1) a faltering company that is actively seeking capital or business and believes notification would prevent it from obtaining such capital, 2) a natural disaster and 3) unforeseeable business circumstances.  Unforeseeable business circumstances are defined as “a business circumstance that is caused by some sudden, dramatic, and unexpected action or conditions outside the employer’s control, like the unexpected cancellation of a major order.”  None of these three exceptions seem to apply to sequestration. Therefore, at least according to the Department of Labor’s guidance for employers, WARN notifications would be appropriate in light of sequestration.  Of course, the Guide is merely best practices, and is not a statement of the law.