Possible pre-election layoff notices spark political debate
A Labor Department memo advised federal contractors — major defense firms among them — that they do not have to warn their employees about potential layoffs from the automatic, across-the-board budget cuts that kick in Jan. 2.
Republicans accused President Obama of trying to keep middle-class Americans in the dark about whether they'll lose their jobs from impending defense cuts as a Labor Department memo cautioning contractors about layoff notices set off political recriminations.
"The president doesn't want people reading about pink slips in the weeks before his election, so the White House is telling people to keep the effects of these cuts a secret until after the election," Senate Minority Leader Mitch McConnell, R-Ky., said Tuesday in a speech on the Senate floor.
The memo advised federal contractors — major defense firms among them — that they do not have to warn their employees about potential layoffs from the automatic, across-the-board budget cuts that kick in Jan. 2.
The 1988 Worker Adjustment and Retraining Notification (WARN) Act says notices would have to go out 60 days in advance, arriving in mailboxes four days before the Nov. 6 election.
The guidance letter said it would be "inappropriate" for employers to send such warnings because it is still speculative if and where the $110 billion in automatic cuts might occur. About half the cuts would be in defense.
The White House did make clear Tuesday that Obama would exercise his authority under last year's budget law and exempt military personnel from any automatic defense cuts.
Pressed on the issue Tuesday, Labor Department spokeswoman Elizabeth Alexander said "there is an insufficient factual basis for employers to form a business judgment about whether or not their contracts will be affected."
The White House told agency officials Tuesday to "continue normal spending and operations" since more than five months remain for Congress to act to avert the across-the-board cuts known as "sequestration."
Acting White House budget chief Jeffrey Zients said Obama remains confident that lawmakers will act to address the automatic cuts, which he described as "highly destructive." Zients wrote to Speaker John Boehner, R-Ohio, that the president would spare military personnel from the automatic reductions.
A key group representing some large contractors said it was reviewing the Labor Department's new guidance, but the group said it still considered it possible that layoff notices would be sent to a large number of employees.
Lockheed Martin has already said it may notify more than 100,000 employees of potential layoffs ahead of the election. Lockheed said Monday it is also reviewing the new guidance. Airbus parent EADS, a major European defense contractor with U.S. operations, also has said it may notify employees of layoffs.
Spokesmen for Northrop Grumman and General Dynamics said last week they have not decided whether to do so, while a Boeing representative would say only the company is planning for a worst-case scenario where the spending cuts occur.