Administration Seeks to Buy-Off Defense Contractors on Sequestration Layoffs
September 29, 2012 - 8:34 am
It’s not exactly bribery and extortion. Let’s call it, “the carrot and the stick.”
The Obama administration is getting serious about preventing defense contractors from issuing layoff notices when their government contracts are cancelled due to budget cuts occurring when sequestration happens on January 1, 2013. For the second time in the last couple of months, they have issued “guidance” for contractors regarding layoffs.
The “guidance” is worthy of The Godfather; they are making the contractors an offer they can’t refuse.
The Obama administration issued new guidance intended for defense contractors Friday afternoon, reiterating the administration’s position that the companies should not be issuing layoff notices over sequestration.
The Labor Department issued guidance in July saying it would be “inappropriate” for contractors to issue notices of potential layoffs tied to sequestration cuts. But a few contractors, most notably Lockheed Martin, said they still were considering whether to issue the notices — which would be sent out just days before the November election.
But the Friday guidance from the Office of Management and Budget raised the stakes in the dispute, telling contractors that they would be compensated for legal costs if layoffs occur due to contract cancellations under sequestration — but only if the contractors follow the Labor guidance.
The guidance said that if plant closings or mass layoffs occur under sequestration, then “employee compensation costs for [Worker Adjustment and Retraining Notification] WARN act liability as determined by a court” would be paid for covered by the contracting federal agency.
Senate Republicans, who accused the White House of trying to hide job losses after the first guidance, said Friday that the new OMB statement “puts politics ahead of American workers.”
“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,” Sens. John McCain (R-Ariz.), Lindsey Graham (R-S.C.) and Kelly Ayotte (R-N.H.) said in a statement. “The president should insist that companies act in accordance with the clearly stated law and move forward with the layoff notices.”
The fight over WARN Act notices began in June when Lockheed Martin CEO Bob Stevens said his company might send the notices to all 123,000 of its employees.
Some companies were hesitant to follow Lockheed, but several others told McCain in letters earlier this month they might send the notices, too, despite the Labor Department guidance.
But the new guidance would appear to address one of the chief concerns from the companies — that they could be liable to compensate employees who were laid off if the companies don’t issue the notices.
The GOP senators complained, however, that this tactic would push the cost of the layoffs onto taxpayers.
Apparently, if sequestration goes through and workers lose their jobs without getting a layoff notice, the company is liable to pay them anyway. The Obama administration has volunteered the tax payer to take care of that little political problem by bribing the companies and paying any wages owed to workers – as long as they don’t send layoff notices that would cause the unemployment rate to spike.
Speaking for myself, I would like the government to unvolunteer the taxpayer and put the burden back where it belongs; on companies who should be following the law, not helping Barack Obama get re-elected.
If anything, it is one more example of the huge power of incumbency and how a sitting president has the ability to shape events in his favor.