House, Department of Labor Disagree Over Applicability of WARN Act to Sequestration-Related Layoffs

by Christy Wu

Recently, the Office of Management and Budget issued guidance to agencies to reduce costs in contract spending, signaling the reality that federal contractors must tighten their belts under sequestration. Yet contracting employers have been guided by federal advice which has not always been clear or consistent.

The House Subcommittee on Workforce Protections, chaired by Rep. Tim Walberg (R-MI), held a hearing with Department of Labor officials on Feb. 14th to discuss the DOL’s Notice to federal contractors in 2012. In its Notice, the DOL advised federal contracting companies that the WARN Act, Pub. L. 100-379 (29 U.S.C. 210l, et seq.), which requires employers anticipating mass layoffs to provide 60’s days notice to employees, did not apply in the event of a sequestration. The Notice was intended to prevent the “inefficient use of resources” towards WARN Act notices, when the WARN Act only requires “employers to provide notice to those workers who are reasonably likely to lose their jobs or suffer other serious employment consequences, but not to those workers who will suffer no such consequences or who have only a speculative chance of suffering them.” The Notice was issued in July 2012 and has been confirmed in a White House memo telling federal contractors that the WARN Act’s notice requirements do not apply in an administrative sequestration. Although sequestration is no longer a speculative event, it’s not clear how federal courts will interpret the DOL’s guidance if employers rely on its language as a defense.

The House Subcommittee noted that the Department’s guidance could be construed as providing blanket immunity for employers who failed to meet the WARN Acts requirements, when in fact the District Courts, and not the Department of Labor, have enforcement authority over the Act. A webcast of the hearing can be found here.