How Will Impending Sequestration on March 1 Affect Warn Act?

How Will Impending Sequestration on March 1 Affect WARN Act?

Feb. 14, 2013

The U.S. House Subcommittee on Workforce Protection held a hearing to discuss employers’ responsibilities under the Warn Act if sequestration occurs on March 1, 2013. What is sequestration? Sequestration refers to the automatic spending cuts for some federal programs that will happen March 1 as required by the congressional budget deal to avert the fiscal cliff. Congress must act to approve sufficient federal funding totaling approximately $85 billion annually for selected federal programs or they will be deleted from the budget beginning March 1.

In the event sequestration occurs, thousands of federal contract employees may be laid off. HR professionals know that the WARN Act requires private employers with 100 or more employees to provide notice 60 days in advance of plant closings and mass layoffs. However, there have been questions as to whether employers must issue Worker Adjustment and Retraining Notification (WARN) Act notices to employees for sequestration-related layoffs. The confusion began when the Department of Labor issued a guidance memo on July 30, 2012 that argued federal contractors are not required to provide WARN Act notices to individuals employed under government contracts funded from accounts that may be sequestered.

Subcommittee Chairman Tim Walberg (R-MI) questioned the department’s guidance memo, noting that the DOL has no enforcement authority for WARN. “The guidance creates the impression that employers who follow the administration’s opinion will be immune from future litigation,” Walberg said. “Nothing could be further from the truth. If a worker feels they’ve been denied proper notice, they have every right to take their employer to court.” Our advice is to issue WARN Act notices to all employees under government contracts who are laid off as a result of sequestration.