10/26/12—TWO SOURCES
After Obama guidance, Lockheed won’t issue layoff notices this year—political pressure versus the Warn Act (LAW)
SEQUESTRATION===Seizing of holding property till legal claims are satisfied. Removal, withdrwal.
Administration from reimbursing defense contractors for severance costs if the firms don’t send layoff notices to employees. Defense firms’ costs would be covered if they have to layoff workers due to canceled contracts under the across-the-board cuts set to take effect Jan. 2.
The layoff notices have become a politically charged issue because they could have come just four days ahead of the election because of a 60-day notice required by federal law for mass layoffs.
The Obama administration issued the guidance on Friday telling contractors that their legal costs would be covered due to canceled contracts under sequestration, but only if they did not issue layoff notices before sequestration occurs — and before the November election. The guidance prompted Lockheed Martin — which had previously threatened to send out notices of potential layoffs to all of its 123,000 employees — to say Monday it would not send notices this year under the Worker Adjustment and Retraining Notification (WARN) Act. House Armed Services Chairman Buck McKeon (R-Calif.) called the administration’s guidance “politically motivated memos with dubious grounding in the law.” “It appears companies will bow to the threat implicit in last week’s OMB guidance; withhold notices today or the government might not cover your court costs down the road. Let me be clear, neither the OMB guidance nor the Lockheed decision will protect a single defense industry job if sequestration occurs in January,”
Graham has been one of the biggest advocates of companies issuing the layoff notices. To raise public concern and force Congress to find a solution to avert the sequestration cuts. Democrats argue that the contractors’ threats to issue mass layoff notices just ahead of the election was a political move. FOLLOWING THE LAW DOESN’T SEEM TO MATTER?
It was “inappropriate” to issue the WARN Act notices due to sequestration, House Armed Services ranking member Adam Smith (D-Wash.) said: “There is no reason to needlessly alarm hundreds of thousands of workers when there is no way to know what will happen with sequestration.”
Second source:
Lockheed Martin and other defense contractors backed down from issuing layoff notices to employees on Monday after the Obama administration promised to pick up the tab for severance costs resulting from sequestration. BY WHAT AUTHORITY CAN HE DO THIS?
The news provided welcome relief for President Obama, who faced the prospect of mass layoff notices in battleground states just days before the election, and outraged Republicans, who accused the administration of bending the law to hide job losses from the public. The White House issued guidance on Friday that said the government would cover the costs if contracts are canceled and layoffs occur due to the automatic
Spending cuts set for 2013. But that offer would be null and void for any contractor that issues job-loss warnings before sequestration begins. Jan. 2 start date for sequestration — to say it would not send any notices this year.
Graham (R-S.C.) called the administration’s actions illegal and said he would work to prevent taxpayer dollars from being used to pay for severance.
taxpayer dollar is spent reimbursing companies for failure to comply with WARN Act,” Graham told The Hill in a phone interview Monday. “That is so beyond the pale — I think it’s patently illegal.”
The fight over layoff warnings under the Worker Adjustment and Retraining Notification Act is just the latest skirmish in a multi-front war over sequestration, which would cut $500 billion from the Pentagon budget over the next decade.
Sequestration has become a potent political issue in Virginia, a swing state both Obama and GOP nominee Mitt Romney are desperate to win. Thousands of defense-industry employees live in Virginia’s northern suburbs, and the cuts from sequestration could hit the state especially hard. The president is standing idly by as the nation’s military force is hollowed out. The administration and Democrats have argued the layoff-notice threat was a political ploy because there was never going to be a need to fire employees en masse on Jan. 2.
Bob Stevens, Lockheed’s CEO, created a firestorm in June when he threatened to send out notices of potential layoffs to all 123,000 of his employees on Nov. 2 — four days before the election — due to the WARN Act requiring companies to give 60 days’ notice of mass layoffs. It was “inappropriate” to issue the notices tied to sequestration.
“The additional guidance further ensures that, if contract actions due to sequestration were to occur, our employees would be provided the protection of the WARN Act and that the costs of this protection would be allowable and recoverable,” Lockheed spokeswoman Jennifer Allen said in a statement.
Loren Thompson, a defense analyst at the Lexington Institute who consults with many defense firms, said that as the notice threat became more political, Lockheed had become “a little lonely” as the chief advocate for issuing them. People might interpret issuing WARN notices as favoring one presidential campaign over the other.
“Nobody in the company, the senior management, thought that issuing WARN notices was going to become part of the presidential campaign.”
BAE Systems, which had said in a letter to Sen. John McCain (R-Ariz.) last month that it might also warn its employees about layoffs, said Monday it “has determined it will not issue conditional WARN notifications to all of its employees following the guidance issued by OMB and DOD last week.”
House Armed Services Committee Chairman Buck McKeon (R-Calif.) told The Hill that the administration was “twisting arms” to get the defense contractors to relent before the election, but said he was surprised that Lockheed went along with it.
“Their whole business is dealing with the government, and the government is threatening them to not follow the law.” Republicans argue that the administration is not following the law say that the sequester is not an excuse to skirt the requirements of the WARN Act, which requires 60 days’ notice for plant closings or layoffs of more than 100 employees for large companies.
Companies that don’t send the notices on time can face legal action and severance costs — something that happened to Lockheed Martin when the new presidential helicopter was canceled in 2009. However, says that the WARN Act would not apply to immediate job losses due to sequestration because those cuts would be an “unforeseeable business circumstance.” Todd Harrison, a budget analyst at the Center for Strategic and Budgetary Assessments, issued a report this summer that said contractors would not feel the effects of sequestration immediately, casting doubt on the need for mass layoff notices in November.
“Once people read the law and understand what it really says, they can look past the hyperbole and see sequestration for what it really is — bad policy that will have long-lasting effects. It doesn’t need any exaggeration.”
Sources—defcon hill, Jeremy herb, warn act, the hill.com,


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