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Tipsheet

Obama Administration to Defense Contractors: No Layoff Notices Until After Election, Please

In an effort to make the economy look a little rosier than it is, the Obama administration is basically coercing defense contractors so as to prevent news of layoffs hitting voters before the election. With sequestration about to result in some major cuts to the defense budget, contractors will lose government business -- and that means, employees will lose jobs. But to prevent poor numbers ahead of the November election, the Obama administration has made it very, well, fiscally unwise for companies to issue layoff notices too early.

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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.

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Basically, the government has tried to circumvent some inevitable bad news in an attempt to give the economy an artificial cushion. It's worth noting the Obama administration's duplicity, as well as the terrible effects of its policies.

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