With a U.S. government promise in hand that it will pick up any extra bills that it might incur, Lockheed Martin now says it won't be sending layoff warning notices to employees prior to the Nov. 6 election.
Facing the likelihood of mandatory budget cuts going into effect after Jan. 1, Lockheed and other defense contractors had been threatening to send out WARN Act notices about Nov. 1 to tell employees they could be in danger of being laid off due to budget cuts.
Now Bloomberg News reports that the Obama administration, which did not want a flood of layoff notices arriving in mailboxes before election day, has given the defense contractors assurances the U.S. government will pick up the tab for any legal and compensation costs they incur if they face WARN Act penalties as a result of budget sequestration induced layoffs.
Federal law requires most employers with 100 or more workers to give 60 days’ notice of plant closings or “mass layoffs” -- labor cutbacks affecting 500 or more workers, or at least 33 percent of the workforce for companies with fewer than 500 employees.
Richard Ginman, the Defense Department’s director of defense procurement and acquisition policy, wrote an industry group on Sept. 28 that “any action to adjust funding levels would likely occur, if it occurred at all, several months after sequestration.” The same day, the Office of Management and Budget said the government will cover legal and compensation costs if contractors are held liable in court for not giving enough notice.
The guidance “ensures that, if contract actions due to sequestration were to occur, our employees would be provided the protection of the WARN Act and that the costs of this protection would be allowable and recoverable,” Lockheed said in the statement.
Barring last minute Congressional act, federal law now prescribes mandatory, across-the-board cutbacks of $1 billion-plus over 10 years from federal discretionary spending after Jan.1, 2013, half of it from defense. That would result in about a $50 billion a year hit to Pentagon spending.