Congressionalleaders are working feverishly on a six month continuing budget resolution theyhope to announce later today or tomorrow, which would avert the threats of hugedefense contractors and other businesses trading with the federal government toissue their employees hundreds of thousands of layoff notices required by theWARN Act. That law requires employers of more than 100 workers to give 60 dayswarning of layoffs planned in response to foreseeable events – events likefederal government shutdowns or deep spending cuts at government agencies. Somestates have stricter laws requiring 90 days notice.
Employersface fines up to $100/day/employee for failing to give the required layoff warning.August 2 is the 60 day deadline before the October 1 start of the federalfiscal year. So, without Congressional action which can be predicted to keepgovernment agencies spending next fiscal year, notices could go out later thisweek. If they do, each party will blame the other for the ensuing economicpanic. The Obama administration’s Labor Department has already issued guidanceto government contractors contending that no WARN Act notices need to be givenat this point in time, but that guidance will not be binding on the courtswhich will apply the act – and the fines – should a shutdown actually happen,and result in contractor layoffs. Defense contracting giant Lockheed Martinsays it may issue as many as 100,000 WARN notices if Congress does not pass adeal, or at least announce one. EADS is following suit. Boeing says it isplanning for a “worst case scenario.”
Othergovernment contractors have declined to comment, while their employment lawyerstry to parse the latest Labor Department guidance.
Economistspredict the worst for American businesses if mass notices go out. “If I’m beingwarned about my job,” Bank of America economist Ethan Harris says, “then I’m goingto start acting as though there’s a real chance that I won’t be employed comingforward. It will have a freezing up effect.”
Whetheror not a deal can be reached remains to be seen. The only certain thing is thatthe politicians on both sides of the aisle are more highly motivated by theuncertainty respecting who the voters will blame for the mess than they areabout exercising real leadership for their constituents.
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