An expert on labor law offers advice on the Worker Adjustment and Retraining Notification (WARN) Act.
Should defense contractors be concerned about the WARN Act?
As a general rule, the WARN Act requires companies with more than 100 employees to give written notice of a facility closing or mass layoff to the affected employees at least 60 days prior to the facility closing or layoff. The WARN Act notice focuses on "loss of employment" which is, among other things, termination that is not voluntary, not retirement, or not based on "cause." Determining whether a WARN Act notice is appropriate includes identifying the number of employees to be terminated and their employment or job site location. Employers who fail to give the required 60-day notice are liable to each affected employee for an amount including up to 60 days of back-pay and benefits, as well as civil penalties up to $500 per day.
Please describe the Executive Memorandum, and how the U.S. Dept. of Defense (DOD) is liable.
The September 28, 2012 Memorandum from the Controller, Office of Federal Financial Management and The Administrator for Federal Procurement Policy states: In July 2012, the Department of Labor (DOL) issued a Training Guidance Letter which concluded that WARN Act notice by defense contractors to their employees is not necessary, as it would fall within the "unforeseeable" exception to the notice requirements, due to the uncertainty associated with sequestration generally, the lack of clarity as to which weapons systems and contracts may be affected by the mandatory budget cuts, and the inability of government contractors to accurately predict, at the present time, which employees may be affected by the anticipated defense budget cuts. The Memorandum also says that employee compensation costs for WARN Act liability and attorneys' fees and litigation costs would be covered by the contracting agency (the DOD for defense contractors). Yet, the Memorandum contains disclaimers which give contractors reason to proceed with caution.
What advice do you offer?
Defense Contractors should review the WARN Act notice requirements and stay abreast of the latest information regarding sequestration. Given the political uncertainties surrounding the issue, I would not place much confidence in the Executive Memorandum as a means of avoiding all litigation costs associated with failing to comply with WARN Act notice requirements. There is an argument, as DOL has put forward, that notice is not required until the whole issue of sequestration and how it will impact specific contracts and employees engaged in those contracts becomes more clear.
What can defense contractors do?
They should inform themselves, consider the plant closings or mass layoffs that could occur if sequestration takes effect, and be prepared to issue notices as warranted, based on the latest info and in consultation with counsel.
NAME: Warne S. Heath
CO.: Bradley Arant Boult Cummings LLP
ROLE: To provide preventative advice and counsel on labor and employment issues to a wide variety of businesses and public entities