OMB: No need for contractors to warn employees of potential sequestration layoffs

It is not necessary – or appropriate – for government contractors to notify employees of sequestration-related layoffs because of the uncertainty surrounding sequestration, the Office of Management and Budget said in a memorandum on Monday.

The memo states that under the Worker Adjustment and Retraining Notification Act, employers with at least 100 employees are required to notify workers within 60 days of certain plant closing or mass layoffs if they are foreseeable.

With sequestration, though, and the likelihood the January 3 deadline for Congress to reach a budget deficit reduction plan to be extended, federal agencies are asking employers to withhold notification to not create “unnecessary anxiety and uncertainty.”

The Department of Labor is responsible for administering the WARN Act.


From the memo, written by Daniel Werfel, controller in the White House Office of Federal Financial Management and Joseph Jordan, administrator for federal procurement policy:

[The Department of Labor] concluded that it is neither necessary nor appropriate for Federal contractors to provide WARN Act notice to employees 60 days in advance of the potential sequestration because of uncertainty about whether sequestration will occur and, if it did, what effect it would have on particular contracts, among other factors: In reaching this conclusion, DOL explained that giving notice in these circumstances would waste States’ resources in undertaking employment assistance activities where none are needed and create unnecessary anxiety and uncertainty for workers.

OMB said that despite previous guidance from the Department of Labor, some contractors have said they are still considering issuing WARN ACT notices.

The memo states that if contractors issue noticies, that federal agencies will be liable in any resulting employee compensation costs as well as attorney fees as they would qualify as allowable costs, OMB said.

Guidance on Allowable Contracting Costs Associated with the Worker Adjustment and Retraining Notification (…

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