Federal Government Actions Unprecedented: Memo to Employers That WARN Act Violations will be Paid for by Federal Government

 
Thursday, October 11, 2012
 

On July 30, 2012, the Department of Labor (“DOL”) issued a Guidance Letter that concluded WARN Act notices are not appropriate in situations like sequestration. Nevertheless, many companies intend to give the necessary Notices since the DOL was not the only party who could challenge an employer's failure to provide the required Notice - the employee being laid off can challenge his employer's failure to give notice. WARN Act notices must be sent out 60 calendar days in advance of reasonably foreseeable plant closings and/or mass layoffs.

What is sequestration? Simply put, it’s the formal term for mandatory cuts to federal programs – the process of cordoning off money that may have been authorized by Congress but is now prohibited from being spent. Literally, the money is being “sequestered” – taken away from the federal agencies affected.

On September 28, 2012, the Federal Office of Management and Budget (“OMB”) informed senior financial and procurement officials that the Federal Government will reimburse contractors for WARN Act litigation costs resulting from the across-the-board budget cuts scheduled for January 2, 2013. 

OMB has taken an unprecedented action of telling procuring agencies that the Federal Government will pay for all costs associated with a contractor's failure to give WARN Act notices before sequestration goes into effect, including attorneys fees. 
The Memo creates additional headaches for employers. What does OMB's Memo really mean? Will it cover any and all violations of the WARN Act? Is the Federal Government going to penalize employers if they do issue a WARN Act notice? 


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