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WARN Act Developments
House Panel Considers Employer Responsibilities Following Sequestration

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On Thursday, Feb. 14, the U.S. House Subcommittee on Workforce Protections held a hearing to discuss employers’ WARN Act responsibilities if sequestration occurs on March 1, 2013.

Sequestration refers to the automatic spending cuts for federal programs slated to occur March 1 as mandated by the Jan. 2 congressional budget deal to avert the fiscal cliff. Unless Congress agrees to sufficient federal spending reductions, funding totaling approximately $85 billion annually for selected federal programs (equally divided between defense and nondefense programs) will be reduced from the budget beginning March 1.

As a result, thousands of federal contract employees may be laid off in the event sequestration occurs. For months, there have been questions whether employers must issue Worker Adjustment and Retraining Notification (WARN) Act notices to employees for sequestration-related layoffs. The confusion was perpetuated by a July 30, 2012, Department of Labor guidance memo 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. Thursday’s hearing only raised more questions.

At the hearing, Employment and Training Administration Assistant Secretary Jane Oates explained the DOL guidance memo by saying, “Any potential plant closings or layoffs that might come about through sequestration-related contract terminations or cutbacks were speculative and unforeseeable. WARN Act notices … were not required 60 days in advance of January 2, 2013 (the original effective date for sequestration).”

But Subcommittee Chairman Tim Walberg (R-MI) questioned the department’s guidance memo, noting that 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.”

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.

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