All manner of bad things could happen if a lame duck Congress fails to act before the end of the year to prevent automatic, across-the-board federal spending cuts from kicking in. However, the Obama administration has informed federal contractors—whose funding could be slashed—that they don’t have to worry about one of them yet: Issuing layoff notices required by the Worker Adjustment and Retraining Notification (WARN) Act.
The WARN Act requires employers with 100 or more employees to provide 60 days’ notice of mass layoffs or plant closings. Should the cuts take place as currently scheduled on Jan. 1, contractors whose funding would fall would normally have had to issue notifications in early November.
However, the White House directed government contractors to hold off on issuing WARN notices. The hope: That Congress and the administration will find an alternative to the cuts once the madness of the election has passed. The White House promised contractors it would cover any legal costs they incur should they be sued for WARN Act violations.
Note: Government contractors taking the White House up on this offer should make sure any pending layoffs are tied directly to fiscal cliff cuts. Cuts that were already scheduled independently of the across-the-board cuts would not be covered by the White House directive.