Obama administration encourages defense contractors to skirt layoff notice law, puts taxpayers on hook for legal costs

With the election right around the corner, news of another huge round of layoffs by government contractors certainly isn’t what President Obama would like you to hear. The administration’s solution? Suggest to contractors that they keep the news under wraps until after the election, and then offer to pay their legal costs for violating the WARN Act.

The Worker Adjustment and Retraining Notification Act requires employers with at least 100 employees to notify them in writing 60 days before a mass layoff — something in the works at several defense contractors as automatic spending cuts go into effect in January, the result of a debt ceiling deal made last summer. In June, Lockheed Martin announced it might send notices to all of its 123,000 employees.

On Friday, the Office of Management and Budget sent a memorandum in a last-ditch effort to again delay the damaging economic news, announcing that it would cover the legal costs if contractors decided to forgo WARN notices.

Here’s Sen. John Thune’s synopsis of the Obama administration’s letter.

From The Hill:

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.

Twitter users helpfully translated the OMB’s memo into plain English; stay quiet about the layoffs until after the election, and taxpayers will cover the lawsuits.

Senators John McCain, Lindsey Graham and Kelly Ayotte issued a joint statement Friday criticizing Obama for putting “his own reelection ahead of the interests of working Americans and our national security” and giving defense contractors a “free pass.” Graham piled on further via his Twitter account.

Chicago ward politics at its worst? And it’s only September.

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