10.22.2014  |   | Subscribe  | Contact us

All News & Blogs

E-mail Alerts

Layoff warnings used as a political football?
Should defense contractors warn workers?

 A-T Solutions is one of the Fredericksburg area defense contractors that could be affected by sequestration.
Visit the Photo Place
Date published: 10/7/2012

By Chelyen Davis

Defense contractors have a difficult decision to make in the coming weeks.

Should they go ahead and warn workers they might be laid off if Congress doesn't act by January to avert defense cuts? Or should they hold off on the dire warnings, hoping the defense cuts don't happen?

Last week the White House Office of Management and Budget suggested they do the latter, issuing a memo that said the federal government would cover some employee compensation and litigation costs for contractors that don't issue layoff notices if the cuts actually go into effect.

Republicans, though, say that's a politically-motivated stance and that Congress won't pay those costs.

The issue arises from the "sequestration" cuts. The package of cuts--billions of dollars over ten years, about half of it from defense--was put in place through a bipartisan agreement last summer to avert a debt default. Essentially, lawmakers agreed to put future cuts in place as a threat to encourage the negotiation of a different, less draconian package of spending cuts.

But such negotiations went nowhere, and the sequestration cuts are now due to start on Jan. 2 if Congress doesn't reach an agreement on how to avert them.

Those cuts will have a big impact on government contractors, and studies show that could result in thousands of jobs lost in Virginia, where the Northern Virginia economy especially is heavy on government contracting work.

Under the federal Worker Adjustment and Retraining Notification (WARN) Act, companies with at least 100 employees are required to give written notice to workers that they're going to be laid off at least 60 days before plant closings or mass layoffs, if possible.

For government contractors affected by the potential sequestration cuts, that 60-day window falls right before the presidential election next month.

But sequestration cuts aren't a sure thing-no one in Congress actually wants them to happen. The House of Representatives has passed a couple of bills to avert them, although the Senate has not taken similar action yet.

Given the heightened political atmosphere surrounding the fall elections, some members of Congress have said they doubt Congress will act further on sequestration until after the election, but Congress does have a "lame duck" session after the election in which it could act.

1  2  Next Page