The Hill: Lockheed Martin Not to Issue Sequester-Related WARN Act Notifications

Lockheed Martin feels comfortable enough with guidance issued by the Office of Management and Budget (OMB) and the Department of Defense (DOD) on Friday that it will not issue sequester-related WARN Act notices, according to The Hill newspaper.  The sequester is scheduled to take effect on January 2, 2013 and many companies have been trying to determine if they must issue layoff notices 60 days in advance to conform with the law.  Such notices would arrive days before the elections, making it a politically charged issue.

Quoting Lockheed Martin spokesperson Jennifer Allen, The Hill reports that following “careful review” of the new OMB guidance and assurances from DOD, “we will not issue sequestration-related WARN notices this year.”  Lockheed Martin is a major aerospace contractor that builds satellites and launch vehicles for DOD, NASA and NOAA.

Under the Worker Adjustment and Retraining Notification (WARN) Act, companies are required to provide 60 days notice before widespread layoffs.  The sequester is scheduled to take effect on January 2, 2013, with potentially dire spending cuts, so government contractors like Lockheed Martin have been debating whether they must issue layoff notices.   Those notices would arrive in workers’s mailboxes just days before the November 6 elections, throwing the issue into the realm of partisan politics. 

The Department of Labor ruled in July that WARN notices were not required, but some congressional Republicans said that was a politically motivated ruling.   Lockheed Martin CEO Bob Stevens had told the House Armed Services Committee (HASC) earlier in July that he might have to layoff 10,000 employees, but did not know which ones because he had no idea what programs would be cut or by how much. The Labor Department’s ruling was insufficient for many defense contractors, however.   Stevens was one of 13 defense contractor officials who responded to letters from Sen.  John McCain (R-AZ) and others in early September expressing continuing concern.

On Friday, OMB issued further guidance saying that layoff notices are not necessary and that if the sequester does occur and results in layoffs covered by the WARN Act, the government will pay employee compensation costs as determined by a court.   DOD’s acquisitions office also issued a statement saying that it does not anticipate cancellations or significant changes to government contracts on January 2 according to The Hill.

Sen. McCain is keeping up his attack on the Obama Administration, however.   In a joint press release on Friday with Senators Lindsey Graham (R-SC) and Kelly Ayotte (R-NH), McCain claimed that the President is putting “his own reelection ahead of the interests of working Americans” by not giving them time to plan their finances in case there are layoffs.  The three Republicans also said that if the government must pay workers who are laid off without WARN notices, it will cost “as much as $4 billion,” and challenged OMB’s authority to interpret the law and obligate the government to pay those costs.  They called on the President to work with Congress to avert sequestration.  The President has been calling on congressional Republicans to do the same thing.  Each side remains intransigent on finding an alternative to reducing the deficit.  Republicans want to reduce the deficit through spending cuts alone; Democrats want a combination of spending cuts and tax increases.