Workers hit hard by massive spending cuts caused by the federal government’s “sequester” might not receive normal notice if they are going to be laid off. And it could cost taxpayers.
At least one local government contractor has announced sequester-related layoffs without issuing WARN notices. A WARN notice normally precedes layoffs or firings that affect more than 100 people and the government guideline is to give workers at least 60 days notice.
Earlier this week, the Tobyhanna Army Depot announced that 418 contract employees were notified that they would be fired by the end of April. The first 95 are being let go tomorrow.
Depot Spokeswoman Jackie Boucher said the layoffs are partially related to funds drying up due to federal sequestration.
The Poconos-area Army depot did not issue WARN notices, which it turns out is exactly what the Obama Administration is advising for sequester-related layoffs.
In the months leading up to the sequester, the White House posted an Office of Management and Budget memo, which references an earlier Department of Labor memo, that gave guidance to large employers that they should not issue WARN notices ahead of sequestration. That Department of Labor memo said doing so would only create unnecessary anxiety and uncertainty for workers. At that time, it was considered a worst-case scenario and the hope was that sequestration -- a series of $85 billion in automatic spending cuts -- would never come to pass.
Now that sequestration is here, the question is whether companies with federal contracts affected by the cuts will abide by the memo.
“I think companies are put in a pretty difficult position,” said Philly attorney, and Fox Rothschild partner, Howard Flaxman. “The government asked them not to do it, the government is the one supplying the money but they have to worry about being sued by employees if there is a WARN problem down the road.”
The Obama Administration felt strongly enough about no WARN notices going out that they've told employers that the government may be able to cover fees for companies that get challenged legally.
“WARN is enforced by employees essentially,” Flaxman said.
There is also a caveat to WARN that allows companies with unforeseen circumstances to fire employees without notices being delivered. It’s unclear if that would be at play in this case.
“Given the long period of time that sequestration was out there as a possibility, it might be difficult for a company to establish that it was an unforeseeable business circumstance,” said Flaxman. “I think it would be a difficult argument to make that, although we all knew about it, we didn’t do it because the government told us not to do it.”
In its press release, the Tobyhanna Army Depot announced the planned layoff of some contract personnel -- mostly industrial and electronics workers -- came after an evaluation of "decreasing funding for workload."
“We have assessed our workload thoroughly, and we do not have funding or sufficient work to justify retention of these personnel at this time. These reductions are always difficult, but we must be prudent stewards of our resources to maximize the efficient support we deliver to the men and women of our Armed Forces,” depot commander Col. Gerhard P.R. Schröter said in a press release.
None of the depot’s 3,600 Army civilian employees are affected by the cuts. And about 300 contractors will keep their jobs at the depot, according to the press release.
The depot didn’t respond to any of our specific questions regarding WARN notices.