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78–696 PDF 2013

SEQUESTRATION: EXAMINING EMPLOYERS’ 

WARN ACT RESPONSIBILITIES 

HEARING 

BEFORE THE

SUBCOMMITTEE ON WORKFORCE PROTECTIONS 

COMMITTEE ON EDUCATION 

AND THE WORKFORCE 

U.S. HOUSE OF REPRESENTATIVES

ONE HUNDRED THIRTEENTH CONGRESS 

FIRST SESSION 

HEARING HELD IN WASHINGTON, DC, FEBRUARY 14, 2013 

Serial No. 113–3 

Printed for the use of the Committee on Education and the Workforce 

( 

Available via the World Wide Web: 

www.gpo.gov/fdsys/browse/committee.action?chamber=house&committee=education 

or 

Committee address: http://edworkforce.house.gov 
(II) 

COMMITTEE ON EDUCATION AND THE WORKFORCE 

JOHN KLINE, Minnesota, Chairman 

Thomas E. Petri, Wisconsin 

Howard P. ‘‘Buck’’ McKeon, California 

Joe Wilson, South Carolina 

Virginia Foxx, North Carolina 

Tom Price, Georgia 

Kenny Marchant, Texas 

Duncan Hunter, California 

David P. Roe, Tennessee 

Glenn Thompson, Pennsylvania 

Tim Walberg, Michigan 

Matt Salmon, Arizona 

Brett Guthrie, Kentucky 

Scott DesJarlais, Tennessee 

Todd Rokita, Indiana 

Larry Bucshon, Indiana 

Trey Gowdy, South Carolina 

Lou Barletta, Pennsylvania 

Martha Roby, Alabama 

Joseph J. Heck, Nevada 

Susan W. Brooks, Indiana 

Richard Hudson, North Carolina 

Luke Messer, Indiana 

George Miller, California, 

Senior Democratic Member 

Robert E. Andrews, New Jersey 

Robert C. ‘‘Bobby’’ Scott, Virginia 

Rube ́n Hinojosa, Texas 

Carolyn McCarthy, New York 

John F. Tierney, Massachusetts 

Rush Holt, New Jersey 

Susan A. Davis, California 

Rau ́l M. Grijalva, Arizona 

Timothy H. Bishop, New York 

David Loebsack, Iowa 

Joe Courtney, Connecticut 

Marcia L. Fudge, Ohio 

Jared Polis, Colorado 

Gregorio Kilili Camacho Sablan, 

Northern Mariana Islands 

John A. Yarmuth, Kentucky 

Frederica S. Wilson, Florida 

Suzanne Bonamici, Oregon 

Barrett Karr, Staff Director 

Jody Calemine, Minority Staff Director 

SUBCOMMITTEE ON WORKFORCE PROTECTIONS 

TIM WALBERG, Michigan, Chairman 

John Kline, Minnesota 

Tom Price, Georgia 

Duncan Hunter, California 

Scott DesJarlais, Tennessee 

Todd Rokita, Indiana 

Larry Bucshon, Indiana 

Richard Hudson, North Carolina 

Joe Courtney, Connecticut, 

Ranking Member 

Robert E. Andrews, New Jersey 

Timothy H. Bishop, New York 

Marcia L. Fudge, Ohio 

Gregorio Kilili Camacho Sablan, 

Northern Mariana Islands 
(III) 

C O N T E N T S 

Page 

Hearing held on February 14, 2013 ....................................................................... 1 

Statement of Members: 

Courtney, Hon. Joe, ranking member, Subcommittee on Workforce Protections ................................................................................................................ 4 

Prepared statement of ............................................................................... 6 

Walberg, Hon. Tim, Chairman, Subcommittee on Workforce Protections ... 1 

Prepared statement of ............................................................................... 3 

Statement of Witnesses: 

Eisenbrey, Ross, vice president, Economic Policy Institute .......................... 41 

Prepared statement of ............................................................................... 43 

Furchtgott-Roth, Diana, senior fellow, Manhattan Institute ........................ 48 

Prepared statement of ............................................................................... 49 

Gies, Thomas, partner, Crowell & Moring, LLP ............................................ 26 

Prepared statement of ............................................................................... 28 

Notestine, Kerry E, Esq., Littler Mendelson, P.C. ......................................... 16 

Prepared statement of ............................................................................... 18 

Oates, Hon. Jane, Assistant Secretary, Employment and Training Administration, U.S. Department of Labor ........................................................... 8 

Prepared statement of ............................................................................... 11 

Additional Submissions: 

Chairman Walberg: 

Article: ‘‘At White House Request, Lockheed Martin Drops Plan to 

Issue Layoff Notices’’ ............................................................................. 68 

(1) 

SEQUESTRATION: EXAMINING EMPLOYERS’ 

WARN ACT RESPONSIBILITIES 

Thursday, February 14, 2013 

U.S. House of Representatives 

Subcommittee on Workforce Protections 

Committee on Education and the Workforce 

Washington, DC 

The subcommittee met, pursuant to call, at 10:02 a.m., in room 

2175, Rayburn House Office Building, Hon. Tim Walberg [chairman of the subcommittee] presiding. 

Present: Representatives Walberg, Kline, DesJarlais, Bucshon, 

Hudson, Courtney, Andrews, Bishop, Fudge. Also present: Davis. 

Staff present: Owen Caine, Legislative Assistant; Molly Conway, 

Professional Staff Member; Ed Gilroy, Director of Workforce Policy; 

Benjamin Hoog, Legislative Assistant; Marvin Kaplan, Workforce 

Policy Counsel; Nancy Locke, Chief Clerk/Assistant to the General 

Counsel; Donald McIntosh, Professional Staff Member; Brian Newell, Deputy Communications Director; Molly McLaughlin Salmi, 

Deputy Director of Workforce Policy; Alexa Turner, Staff Assistant; 

Joseph Wheeler, Professional Staff Member; Mary Alfred, Minority 

Fellow, Labor; Tylease Alli, Clerk/Intern and Fellow Coordinator; 

Jody Calemine, Minority Staff Director; John D’Elia, Minority 

Labor Policy Associate; Daniel Foster, Minority Fellow, Labor; 

Brian Levin, Minority Deputy Press Secretary/New Media Coordinator; Celine McNicholas, Minority Senior Labor Counsel; Richard 

Miller, Minority Senior Labor Policy Advisor; Megan O’Reilly, Minority General Counsel; Michele Varnhagen, Minority Chief Policy 

Advisor/Labor Policy Director; and Michael Zola, Minority Senior 

Counsel. 

Chairman WALBERG. A quorum being present the subcommittee 

will come to order. Good morning, and welcome to the first hearing 

of the Workforce Protection Subcommittee of the 113th Congress. 

I would like to welcome our members and thank our witnesses for 

being with us today. I would like to extend a special good morning 

to Assistant Secretary Oates. Thank you for participating with us 

this morning. 

Finally, I would like to recognize our colleague from Connecticut, 

the man who is willing to make sure history is accurate. Lincoln 

is upheld as well as his state of Connecticut and the efforts they 

had on emancipation. And thanks for giving some notoriety to our 

subcommittee by just being here as well. Joe Courtney has taken 

on the role as senior Democratic member for the 113th Congress. 
2 

I look forward to working together over the next 2 years and I will 

try to make sure my facts are accurate as well. 

As part of the Budget Control Act of 2011 President Obama insisted on a process known as sequestration, a series of across-theboard spending cuts that will impact most defense and domestic 

programs. Sequestration is not how Washington should conduct the 

people’s business. It has created even more uncertainty in an already difficult environment. 

Twice House Republicans have taken action to replace sequestration with common sense cuts and reforms. Unfortunately, the president has failed to offer his own proposal that will help control runaway spending and get this economy moving again. With our nation fast approaching $17 trillion in debt and more than 12 million 

Americans searching for work, the time for leadership is now. 

As we eagerly await the president’s plan, we have a responsibility to examine the impact of sequestration on policies within our 

jurisdiction. The committee’s continued oversight of the Worker Adjustment and Retraining Notification or WARN Act is part of that 

effort. 

Congress approved the WARN Act to help workers plan for possible job losses, as well as allow them time to assess various employment services provided by the states and federal government. 

The law requires employers with more than 100 employees to give 

workers 60 days notice of mass layoffs or plant closings. A legal notice must include specific details, including the expected date of the 

first layoffs and the job titles that will be affected. 

The law also includes provisions for conditional notices, as well 

as exceptional circumstances when an employer wouldn’t be required to issue a 60-day notice. Employers who fail to provide proper notices can be sued in federal court, liable for back wages and 

benefits, and be forced to pay monetary penalties. 

Numerous federal contractors have advised Congress that sequestration may lead to layoffs in their workplaces. As job losses 

become more eminent, employers have legal responsibilities they 

must follow. While there are longstanding concerns with the act, it 

is a law, a law of the land. Political shenanigans should not interfere with an employer’s obligation to follow the law or the Labor 

Department’s role in administering the law. 

However, last summer the Obama administration managed to inject even more uncertainty into sequestration. On July 30, the department released guidance that states the WARN Act does not 

apply to sequestration and instructed employers not to issue notices. The department’s guidance raises a number of concerns. 

First, the guidance contradicts current regulations that encourage employers to provide as much notice as possible, even when 

they are uncertain which jobs will be cut and when. And while the 

law creates an exemption for unexpected circumstances, to be legally protected employers must still issue notices as soon as layoffs 

are reasonably foreseeable. 

Additionally, the department has no enforcement authority over 

the WARN Act. Federal judges are responsible for enforcing the 

law and they ultimately decide through costly litigation whether an 

employer complied with the law. 
3 

Finally, the guidance creates the impression that employers who 

follow the administration’s opinion will be immune from future litigation. Nothing could be further from the truth. If a worker feels 

they have been denied proper notice, they have every right to take 

their employer to court. 

Perhaps this explains why the Office of Management and Budget 

explicitly promised to use taxpayer’s dollars to cover the legal expenses an employer might face for failing to warn workers of future 

layoffs. That is right, the Obama administration is telling employers to ignore the law and forcing taxpayers to pick up the tab. 

Assistant Secretary Oates, these are important concerns, and I 

am sure you feel the same way, concerns that require a serious response. I am disappointed. The administration has refused to cooperate in good faith with this committee’s oversight investigation 

into this matter. 

Providing over 400 pages of materials that were slipped under a 

door in the middle of the night, last night, before a congressional 

hearing, when those materials were first requested 6 months ago 

is really an insult to this committee. Congress deserves better. 

Americans, America’s workers, employers, and taxpayers deserve 

better. It is time we got answers to the questions we have been 

asking, and I hope today will be that opportunity. 

Again, I would like to thank our witnesses for joining us. And I 

will now recognize my distinguished colleague Joe Courtney, the 

senior Democratic member of the subcommittee, for his opening remarks. 

[The statement of Chairman Walberg follows:] 

Prepared Statement of Hon. Tim Walberg, Chairman, 

Subcommittee on Workforce Protections 

Good morning and welcome to the first hearing of the Workforce Protections Subcommittee in the 113th Congress. I’d like to welcome our members and thank our 

witnesses for being with us today. I’d like to extend a special good morning to Assistant Secretary Oates. Thank you for participating in today’s hearing. 

Finally, I would like to recognize our colleague from Connecticut, Joe Courtney, 

who has taken on the role as senior Democratic member for the 113th Congress. 

I look forward to working together over the next two years. 

As part of the Budget Control Act of 2011, President Obama insisted on a process 

known as sequestration, a series of across the board spending cuts that will impact 

most defense and domestic programs. Sequestration is not how Washington should 

conduct the people’s business. It has created even more uncertainty in an already 

difficult environment. 

Twice House Republicans have taken action to replace sequestration with commonsense cuts and reforms. Unfortunately, the president has failed to offer his own 

proposal that will help control runaway spending and get this economy moving 

again. With our nation fast approaching $17 trillion in debt and more than 12 million Americans searching for work, the time for leadership is now. 

As we eagerly await the president’s plan, we have a responsibility to examine the 

impact of sequestration on policies within our jurisdiction. The committee’s continued oversight of the Worker Adjustment and Retraining Notification (WARN) Act 

is part of that effort. 

Congress approved the WARN Act to help workers plan for possible job losses, as 

well as allow them time to access various employment services provided by the 

states and federal government. The law requires employers with more than 100 employees to give workers 60 days’ notice of mass layoffs or plant closings. A legal notice must include specific details, including the expected date of the first layoffs and 

the job titles that will be affected. 

The law also includes provisions for conditional notices, as well as exceptional circumstances when an employer would not be required to issue a 60-day notice. Em-
4 

ployers who fail to provide proper notices can be sued in federal court, liable for 

back wages and benefits, and be forced to pay monetary penalties. 

Numerous federal contractors have advised Congress that sequestration may lead 

to layoffs in their workplaces. As job losses become more eminent, employers have 

legal responsibilities they must follow. While there are long-standing concerns with 

the act, it is the law of the land. Political shenanigans should not interfere with an 

employer’s obligation to follow the law or the Labor Department’s role in administering the law. 

However, last summer the Obama administration managed to inject even more 

uncertainty into sequestration. On July 30, the department released guidance that 

states the WARN Act does not apply to sequestration and instructed employers not 

to issue notices. The department’s guidance raises a number of concerns. 

First, the guidance contradicts current regulations that encourage employers to 

provide as much notice as possible, even when they are uncertain which jobs will 

be cut and when. And while the law creates an exemption for unexpected circumstances, to be legally protected employers must still issue notices as soon as layoffs are reasonably foreseeable. 

Additionally, the department has no enforcement authority over the WARN Act. 

Federal judges are responsible for enforcing the law and they ultimately decide 

through costly litigation whether an employer complied with the law. 

Finally, the guidance creates the impression that employers who follow the administration’s opinion will be immune from future litigation. Nothing could be further from the truth. If a worker feels they’ve been denied proper notice, they have 

every right to take their employer to court. 

Perhaps this explains why the Office of Management and Budget explicitly promised to use taxpayer dollars to cover the legal expenses an employer might face for 

failing to warn workers of future layoffs. That’s right: the Obama administration is 

telling employers to ignore the law and forcing taxpayers to pick up the tab. 

Assistant Secretary Oates, these are important concerns that require a serious response. I am disappointed the administration has refused to cooperate in good faith 

with this committee’s oversight investigation into this matter. Providing over 400 

pages of materials that were slipped under a door in the middle of the night before 

a congressional hearing—when those materials were first requested six months 

ago—is an insult to this committee. Congress deserves better. America’s workers, 

employers, and taxpayers deserve better. It is time we got answers to the questions 

we’ve been asking. 

Again, I’d like to thank our witnesses for joining us, and I will now recognize my 

distinguished colleague Joe Courtney, the senior Democratic member of the subcommittee, for his opening remarks. 

Mr. COURTNEY. Well, first of all, thank you, Chairman Walberg, 

for convening this hearing. Thank you for your kind words this 

morning. 

The two of us entered Congress together in 2006, and who knew 

that a short time later we would again be able to help lead one of, 

in my opinion, the most important subcommittees in Congress, 

which is about making sure that people who get up to work every 

day come home safe and sound and are able to actually support 

their families. And again, I look forward to working with you. 

We had a good meeting this morning to talk about our mutual 

end goal here, our mutual mission, which is to actually make this 

subcommittee produce real results and hopefully not just degenerate into a debate club. So again, thank you again, for your nice 

words. And I look forward to working with you. 

And I want to thank the panel for coming here this morning as 

well; again, just a stellar background and credentials to have this 

important discussion here. And again, I think this topic of sequestration is probably the most critical facing our country in the near 

term. 

Yesterday my other committee, the House Armed Services Committee, held a hearing with the Joint Chiefs, the general who is in 
5 

charge of the National Guard. There were 27 stars on the witnesses that were there. So, you know that is tough to match. 

However, I am sure you are going to be just as informative today 

as they—as these amazing individuals who serve our country. And 

frankly the message they conveyed in terms of sequestration is impact, aside from the issue that we are talking about today. I mean 

we are talking about an immediate damage to the military readiness of this country. 

The Navy cancelled an aircraft carrier mission to the Middle 

East, which is going to provide critical support for our troops in 

terms of air cover. Making sure that the Strait of Hormuz is kept 

clear for, again, 20 percent of the world’s oil supply. 

This is an issue which we must deal with immediately. And 

frankly, I am quite disappointed that we are not in session next 

week. Our work schedule, frankly, does not match the gravity of 

the challenge that our country faces right now. And again, hopefully maybe this hearing will help the cause in terms of trying to 

get really what I think is the real solution to this problem, which 

is to make sure that we come up with a deficit reduction plan that 

hits the target of the Budget Control Act. 

I would like to point out that when the Budget Control Act was 

passed in August of 2011 it was negotiated between the White 

House and the Republican House leadership and the Senate Democratic leadership. Speaker Boehner, after the vote, said that he got 

98 percent of what he was looking for; not 50 percent, not just the 

part beside sequestration, but 98 percent of what his caucus and 

what his party was looking for. 

So, the fact of the matter is sequestration is something that both 

sides have their skin in the game, and frankly both sides need to 

solve. And I think if you look at the true legislative history, as long 

as we are talking about history this morning, of sequestration, 

what we actually did in August of 2011 was incorporate the 1985 

sequestration statute, Gramm-Rudman, and just basically update 

the measure to this era that we are living in right now. 

The structure of sequestration is identical to the one that was 

passed in 1985 by—led by Gramm and Rudman. And I think if you 

go back and read Senator Gramm’s comments about what the legislative intent of sequestration was when they passed it, he says it 

is very clear. It was never the objective of Gramm-Rudman to trigger sequester. The objective of Gramm-Rudman was to have the 

threat of sequester force compromise and action. 

So, again, the—and if you look at what happened in the wake of 

1985, again very difficult moments occurred in terms of coming up 

right to the edge of having that chainsaw go through the government. But cooler heads prevailed. People did their job. They sat 

down and negotiated and compromised, and they came up with a 

result. 

And if you look at, again, at the fiscal cliff bill that passed on 

January 1st, just a few days ago, we delayed sequester by 2 

months. And how did we do it? We paid for it with a mixture of 

revenue that was 50 percent of the pay for and 50 percent were 

cuts. And that in fact is precisely the same Da Vinci Code, the 

same formula that was used by the Congress, by our predecessors 
6 

to avoid having, again, a devastating impact on our national security and on domestic priorities that are so critical to our country. 

Sequestration would be a disaster for this country in terms of 

having, again, an indiscriminate mechanism go through the domestic budgets and national security budgets of this country. And 

again, that should be our priority here today. 

Lastly, I would just say coming from a district where the largest 

manufacturer is Electric Boat, 9,000 employees. They have one customer, the U.S. Navy. And sitting on the Seapower Subcommittee 

we were following this WARN notice issue like a box score because 

it affected, again, thousands of people who live in southeastern 

Connecticut. 

And I would just say this. I think the undersecretary got it right. 

The fact of the matter is, is that procurement for programs like 

submarines, which take 5 years to build, or aircraft carriers, which 

from start to finish are 10 to 15 years. The fact of the matter is 

the funding supply is procured over a period of years. 

So, even if sequestration did go into effect on January 1st, but 

it did not thank God, the fact of the matter is, is that the obligation 

of funds, procurement of funds for programs like the Virginia-class 

submarine program or the Ohio replacement program or the carrier 

program that is being built in Virginia. Those funds are already 

well into the system so that the contracting officers who have to 

deal with these defense venders—I mean they are not going to turn 

the switch off on day one. It does not happen all on one day all at 

once. 

Again, I don’t want to minimize the damage it would do in terms 

of having a real horizon down the road. But the idea that it would 

trigger something as immediate as a WARN Act notice, frankly is 

a notion completely divorced from the reality of how contracting actually takes place with defense contractors. 

And this is right in my wheelhouse. My nickname in Congress 

is ‘‘Two-Subs Joe’’ because we got the shipbuilding program enlarged over the last 2 years to get to two subs a year. 

So, I mean we follow this thing not just like a box score, but really microscopically. And the notion that that employer was obligated 

to have a mass blanket WARN notice, frankly, is just completely 

disconnected from the reality of how they hire and how they build 

programs that take years to complete from start to finish. 

So, again, I am looking forward to having this hearing today 

flush out some of these issues in terms of the real mechanics of 

what triggers a human resource officer to comply with the WARN 

notice. And again I look forward to your testimony and your answers to our questions. 

Thank you, Mr. Chairman. I yield back. 

[The statement of Mr. Courtney follows:] 

Prepared Statement of Hon. Joe Courtney, Ranking Member, 

Subcommittee on Workforce Protections 

I want to thank all of our witnesses for coming to share their experience and expertise on the Worker Adjustment Retraining Notification Act (WARN) and, in particular, the responsibilities of our nation’s employers under this law in the context 

of sequestration. 

Since 1988, the WARN Act has ensured the protection of our workers by requiring 

covered employers to provide affected workers with notices of impending plant closings and mass layoffs 60 days before they occur. The law ensures that employees 
7 

are given a sufficient amount of time to seek and obtain alternative employment. 

Issuing a WARN notice also triggers rapid response from state departments of labor 

and unlocks worker retraining funds and other resources. 

Last summer, the applicability of WARN Act requirements relative to the impacts 

of sequestration become a hot topic ahead of the then-looming trigger date of January 2, 2013. To clarify the WARN obligations of employers in anticipation of sequestration, the Department of Labor issued guidance indicating that such notifications 

were not required under the law and, in many ways, contrary to the law’s intent 

to provide specific, detailed and accurate information to affected employees. The Department’s guidance—issued under their longstanding practice to provide information guidance on laws and regulations under the department’s purview—concluded 

that the law’s unforeseeable business circumstance exemption applied in the case 

of sequestration. 

Much has been said about this guidance, and no doubt we will hear from some 

of our witnesses today why they believe the Department’s guidance on this matter 

was not in line with their interpretation of the law. However, with the new sequester deadline of March 1, 2013 rapidly approaching just fourteen days from today, 

the truth is that little has changed since the Department issued their July guidance. 

While sequestration appears more likely to be triggered today than it did last 

summer, I believe there remains bipartisan interest in both chambers of Congress 

to avoid these broad and indiscriminate cuts to our federal budget. And, in reality, 

the specific impacts of sequestration on particular programs, projects and contracts 

still remains to be seen—in the case of defense contracts, for example, it may take 

several months or even years before the actual impact of budget cuts from sequestration will be felt. Many other factors, such as the calculation of unobligated balances, adjustments to contract terms and timing and potential flexibility in a company to readjust their workforce between government and private work, could potentially be at play here. 

As such, broad notices are inappropriate until such time that more detailed information is known about specific impacts to contracts and projects—and their resulting impact on a company’s workforce—should this process be triggered. Until then, 

the uninformed uncertainty and consternation—as well as the use of limited retraining dollars and resources by already cash-strained states—that is triggered by 

WARN notices would be premature and counterproductive. 

The reality is that the uncertainty surrounding sequestration is being felt now. 

On January 30, the U.S. Department of Commerce reported that gross domestic 

product fell at a 0.1-percent annual rate in the fourth quarter of 2012, down from 

three-percent growth in the quarter before. The sudden dip is due to uncertainty 

caused by the threat of sequestration. This uncertainty caused a drop in the defense 

sector, which fell at an alarming 22.2-percent annual rate in the quarter. Although 

personal consumption expenditures rose at a 2.2-percent rate, business spending on 

equipment and software rose at a 12.4-percent rate, and housing investment rose 

at a 15.4 percent clip, strong performances in those sectors were not enough to offset 

a severe slowdown in defense spending as the Pentagon and defense firms gird for 

sequestration. 

As we are all too well aware, the impact of sequestration goes well beyond the 

defense sector. For instance, more than 2,700 would see their Title I education funds 

cut at a time when local school systems are strained more than ever to provide our 

schools with the resources they need. Cuts to IDEA and special education programs 

would eliminate federal support for more than 7,200 teachers and staff who work 

each and every day to support children with disabilities. And, more than 70,000 

Head Start and Early Start students would have their early education reduced or 

eliminated. From food safety to economic development, law enforcement to supporting those struggling to make ends meet, sequestration’s impacts will be felt far 

and wide in nearly every aspect of our economy. 

Let us remember that sequester was not a new concept that was thought up in 

the summer of 2011; this mechanism was first authorized 27 years ago by the bipartisan Balanced Budget and Emergency Deficit Control Act of 1985 (commonly 

known as the Gramm-Rudman-Hollings Act). Notably, Senator Phil Gramm, one of 

the authors of the 1985 sequester law, told the Senate Finance Committee in 2011 

that ‘‘It was never the objective of Gramm-Rudman to trigger the sequester; the objective of Gramm-Rudman was to have the threat of the sequester force compromise 

and action.’’ 

The single more important thing that this Congress can do right now to provide 

employers and employees with the certainty they need is to come together to pass 

a balanced and bipartisan agreement to ward off the looming trigger of sequestration. It is my sincere hope that this Congress can once again make the compromises 

and take the action necessary to provide our employers with the certainty they need 
8 

and avoid the self-inflicted damage to our economy that we have within our power 

to prevent. 

Chairman WALBERG. I thank the gentleman. 

Pursuant to committee Rule 7(c), all members will be permitted 

to submit written statements to be included in the permanent 

hearing record. And without objection the hearing record will remain open for 14 days to allow statements, questions for the record 

and other extraneous material referenced during the hearing to be 

submitted into the official record. 

It is now my pleasure to introduce formally our distinguished 

panel of witnesses. 

First, the Honorable Jane Oates is the Assistant Secretary for 

the Employment and Training Administration at the U.S. Department of Labor. 

Our second is Mr. Kerry Notestine—I hope I got that right, who 

is a shareholder and co-chair of the Business Restructuring Practice Group at Littler Mendelson law firm in Houston Texas. Welcome. 

Mr. Thomas Gies is a partner and founding member of the Labor 

and Employment Law Group at Crowell & Moring law firm in 

Washington, D.C. Welcome. 

Mr. Ross Eisenbrey is the vice president at the Economic Policy 

Institute in Washington, D.C. And I would say Go Blue to you as 

well. 

Ms. Diana Furchtgott-Roth is senior fellow at the Manhattan Institute for Policy Research in Washington, D.C. 

Thank you all for being here. None of you are novices at that 

table. You know the lighting system, the 5-minute process, the 

warning yellow light that comes on, and then our appreciation 

when you keep as close to that 5-minute time period as possible. 

And we will attempt to keep ourselves to the 5-minute time period 

as closely as possible as members also. 

So, having said all of that, Undersecretary Oates, thank you 

again for being here, and we would appreciate your comments now. 

Is the microphone on there? 

STATEMENT OF HON. JANE OATES, ASSISTANT SECRETARY, 

EMPLOYMENT AND TRAINING ADMINISTRATION, U.S. DEPARTMENT OF LABOR 

Ms. OATES. Oh. There it is. I am sorry. As a former ninth grade 

teacher I did not want to bellow at you. I am sorry. 

Good morning. I appreciate the opportunity to discuss the Department of Labor’s June 30th guidance to the State Dislocated 

Worker Units on whether as of that date the possibility of a January 2, 2013 sequestration would trigger the advance notice requirements of the Worker Adjustment and Retraining Notification Act, 

the WARN Act. 

The WARN Act was enacted in 1988, and many of you know the 

history better than I, with wide bipartisan support. The law provides protection to workers, their families and their communities 

by requiring employers subject to certain exceptions to give workers or their representatives 60 days advanced notice of plant closings and mass layoffs. Employers are also required to give notice 
9 

to local government and State Dislocated Worker Units so that 

workers can promptly receive the appropriate assistance that they 

may need. 

The Department of Labor does not enforce the WARN Act, as you 

said, Mr. Chairman. That is left up to private parties and the 

courts. We do, however, have statutory authority to issue regulations, which we did soon after the law took effect in 1988. 

Our objective in issuing those rules was to articulate clear principles and guidelines that could be applied in specific circumstances. These regulations require WARN Act notices to contain specific information. These requirements are consistent with 

the WARN Act’s primary purpose, which is to give specific workers 

who are likely to lose their jobs a period of time in which they can 

find new work or make other arrangements, and can obtain assistance from the state and local workforce programs. 

These requirements are also consistent with the notion that advanced notice should not be provided to workers who are not likely 

to be affected. As the regulation’s preamble explains, it is not appropriate for an employer to provide a blanket notice to workers. 

At the time we issued the regulations, the department recognized 

that the rules could not address every advance notice issue that 

might arise under the WARN Act. We have supplemented over 

time those regulations with less formal guidance to help State Dislocated Worker Units and employers carryout the law is important 

purpose. 

For example, we have a special Web site for the WARN Act that 

has compliance assistance materials containing, among other 

things, a worker’s guide, an employer’s guide and a fact sheet. Another type of informal guidance we frequently provide the states 

across our issues in ETA is our training and employment guidance 

letter known as TEGLs. Everything has an acronym. 

These advisories provide direction and information on procedural, administrative, management and program issues. One such 

issue arose last spring when Congress, state workforce agencies 

and others began asking whether the possibility of the sequestration was a sufficient predicate to require federal contractors to 

issue WARN notices. 

To provide clarity to state workforce agencies and others, the department issued a TEGL. The TEGL summarized the relevant 

WARN framework and reiterated a straightforward principle that 

a blanket notice is neither appropriate nor legally sufficient under 

the WARN Act. 

It also explained that because the law requires notice only for the 

specific employees who may reasonably be expected to experience 

an unemployment situation as a result of a plant closing or mass 

layoff, employers have no WARN Act notice obligation when particular employment losses are speculative. 

The TEGL then applied the WARN Act framework to the potential sequester on January 2, 2013. At the time the TEGL was 

issued, members of Congress and the administration had both indicated that their goal was to avoid sequestration. So the TEGL explained that the occurrence of sequestration was not necessarily 

foreseeable. 
10 

In addition, the OMB had not directed federal agencies to begin 

planning for how they would operate in the event of sequestration. 

Agencies had not announced which contracts would be affected by 

sequestration should it occur. The TEGL stated that in the absence 

of additional information any potential plant closing or layoff that 

might come about through a sequestration-related contract termination or cutbacks were speculative and unforeseeable. 

WARN Act notices, the TEGL concluded, were not required 60 

days in advance of January 2, 2013. The TEGL also makes clear 

that the prospect of sequestration was part of a dynamic process, 

and that additional information would make the possibility of plant 

closings or layoffs less speculative and more foreseeable. 

It is important to keep in mind that a TEGL is an interpretative 

aid for state workforce agencies and their administrators and liaisons who on a daily basis field questions from federal contractors 

and help workers who are dislocated by plant closings and mass 

layoffs. The TEGL does not suggest that federal contractors don’t 

need to take the WARN Act into account when considering the consequences of a possible sequestration. 

The department is committed to help ensure that WARN Act notices are provided in appropriate circumstances. However, providing WARN notices to workers who are not likely to lose their job 

can unnecessarily disrupt their lives, be disruptive for the employers because very important employees could choose to leave their 

job. And it also wastes government resources by forcing the state 

workforce agencies to kick in with rapid response efforts. These are 

serious situations that should be avoided. 

Let me close by saying that our analysis and guidance regarding 

the WARN Act’s application to sequestration was and is correct. 

And workers and the state workforce system have all been well 

served as a result of the TEGL. Funds were not sequestered on 

January 2, 2013, nor were contracts terminated, plants shuttered, 

or to our knowledge unnecessary advanced notices sent. Just as important, lives and businesses were not disrupted unnecessarily, and 

resources were not wasted. 

Thank you for inviting me, and I look forward to your questions. 

[The statement of Ms. Oates follows:] 
11 

STAT&.\tEl\TOF 

JAN£OATF.S 

ASSIST AI'« SECRETARY 

£Ml'U)YME/'n' ~D TRAINING AD.'>tI""ISTKATION 

U.s. D£l'ARTMliNTOII LABOR 

DErORETHE 

SUBCOMM1Tl"EE ON WORKFORCE l'ROT£cnONS 

CO!'o1~1ITl"n: ON EDUCATION AND THE WORKFORCE 

UNITED STATES IIOUSE OF RE'RESEl\TATIVF.S 

F.b .... .,. 1., 2011 

Good lIIOrDinj. Cllli",.." W.lbcr&, Ranki"" MembeT Counney. and Mtmbm of the 

SubcommilW. [~!he opportuQi'ylO d;sc .... !he DopanmenI oflAbor'. July 30, 2012 

i\lidanec 10 SUIte Di>IocIted Work.,. Un; •• on whe!her, at of .... dale. the poaibiliry or. 

protecrion to wo,k.,. .. thoi, f"",itics, and thei, communities by ~lIi,in8 empJoym _ llIbjecllO 

<:ert&ia .~COPriOM - 10 &i~ WOth-" or their ttpre .. n&alivu 60 dill'S' odYanc:e noclte of platll 

ciosirlp and mass laroffs. Employen 1110 at< .~ 10 live notice 10 \ocaI ............... 

official. and 10 SIa'" Di. located WOlke. Un;!$, SO !hal wotko" Call promptly rtecivupp«>priate 

WAI!.N Ae"I in 1988. WI ~ailbti"" was r.i, 10 borh worI<cnand busi .... ua. II wao fair 10 

work ..... h. lAid, bccoUK !hey deoerVC<IlDOR llwIa day or .wo of Il0l0.:.: of impmclinl dosin&< 

aIICIlaroffs. And it ... fai. 10 ~ he,.;d. bccourc Ihe Irp.lation ''''oeoiZltd rhol 
12 

or ""'''' l.yofT result! from cir'cwnstano::eJ thai CIIlDOt rtasonably be: an1icipaw:l. TWCJ\ty_fi .... 

years t.t.f. ~t.iYCo GaR-i.o', ~ _inue 10 _te. 

Tho IlcpBrtmcfoI of t.abor docs not ... fo,cc the WARN Act - ma" s Iell up 10 pl'ivotc 

pMti<1 We do. 110_. '-" 1I\aI\IIOI')' ...monty 10 inuc >qulll""'" which...., did '100II al'ter 

Ih. law look efT..,t Ow' objecli •• in i .. uing I""" nrl", was I() articul. te clear principle! and 

~i_ tt.I could be: appIiod In Spc>Oif ... c~ 

1'belot ~8ulalions require WARN ACI rIOticts I() I:<lnlainspcc'fic 'nfomIlUiOl'l. For 

enmpk, noriccs 10 S .... Di$loo;aled WOIbr Ulliu mllSl '""lucIe; 

The: name and address of !he emplo)1MrII sit. wh.", !be plam d osing or 

~lfwill""""f; 

A Slal"",e,U Q 10 whttlltr lhe plonncd IIdIon il CJlptC~ 10 be permanrnlor 

1'be job ti'l .. or positions I() be . fTecl.d; and 

• Tho liliiii00 of arr..,1£d cmplo~ in tatb job daaiftClltion. 

T'htlot re.jui"'ments.", consiS1eflI with tho WARN Act', primary purpMe, which is to &in 

$p<CiflC woo1<erit who .... likely 10 \ott tbtir job:$. period oflime in "",,",h !hey CIft find ..... 

work 0. make otllt . ...... gcrnems. and """ obl.ain ass'stante from Sllte and local workfon:e 

PfOInInI$. lbcx roqllir ........... are abo COIIIiJIcnt with !hi ~ 1lIaI ..:Ivanocc notice oboukI not 

be provided '0 work ... wbo arc IlO1 likely to be afTected. A, tho "'aul.~oo· s pr ...... ble explains. 

~it i. DOt appropriII. (Of .. employtr I() provide • blank .. -xc I()...wets. ~ 
13 

At the lime we issued the ~gulltions we recogniud Wt our rules could nohdd ..... 

eva}' advance notice iMue dUI! migm arioe IlI'o&r .... WARN Act. We ""-~ supplemaued dies<: 

regulatioll$ with less fOfTl\aI guidance ttl hell' SUIte Di,located Worter Units and employe .. carT)' 

ooo! the 10 .... '. importAnt purposes. ForelWTlj.>le, wdll",e a special websile fOf WARN A<:I 

compliance "";,IIInCC ma!erlal, [www.dole!ll.8 .... llayoITlw&m.cfmj. lObicb oon!llins, among 

otherthings,a Work.r'. Guide, an Employer's Guide, a WARN Faa Sheet, 1l!Id. set of 

Frequently Asked QuestiOns and A~rs. 

AnoIOO type oflnm"",,1 guidance "'" freqocruly prOvidc '0 Sial. Workforce A8en<:~ il 

our Tro.ining ond Employment Guidance Letters, koown os TEGLs. n..: .. Idvlsori .. provide 1he 

~."t'. interpretation' of Fedora! requi",ments. and they provide direction and infonnation 

Oft pnXedurai, adminiS!TOllve. "'""agemenl, oM prOgram issues Wt may arise within the 

.......uoroe sys\em. 

One such isslle arose las! Sprina, when Congrns, Slale Workfon:e Agencies, lhe Pfess, 

lIovemmenl oontra<:1OrS, <1100 FedenJ age""i .. , and llwy.ers began ask; n8 whelher the 

po.«ibilily oflbe seques,,,,'ion on January 2, 2013, mandalM by lb. BaI"",,"'" BDdge. and 

Il .... rge""y ""fic;t Control Act of! 985 (BBEDCA), '" amended by the BDdge! C<mlTOl Ae! of 

2011 (BCA). wau ""mo;'n. ~kale 10 requi~ federal contrac:!On 10 issue WARN AOI 

IIOlic ... To at\SWeI this legal question and pn:Ivide clarity 10 Stale Woridorce Ageno;'s and other 

interesle<l ponies. the Dep&rtmtm issued I TEGL. 

The 11!GL fil'SllUmmarized .... rel~, WARN ACI framework, ",ile,;iling !be 

straightforward principle - ~nectcd in lhe legislative hist"!)' ond the p"'ornble 10 the ~1UI.tions 

- thot . blanket noti"" 1$ .,.ilb .. appropriate <>Or t.plty ouffici ... lllI'o&, the WARN Act. It aiX! 

expt.ir-.ed .hat, bo;;ause the law requ.i"", "",ioe only for the specific emplo)'«s who ll\Iy 
14 

rtl50nably be expected to experience an employmem loss as a result of • pi.", closing Or mass 

la)'CIT, employcn have no WARN Act no,ice oblip';on! wh." pM;.ul". employ ..... ,..t l..-sate 

SpO<:ui8!ive. 

ThonOL 'hen .pplied (as of July 2012) m. WARN Aot frtmewt>.k to m. potent;'1 

'lC<iu."", on January 2, 2011. At m. time m. TEOL was issued, M.mbc1.ofCOngr .... and tit. 

AdminislI.tion had indicated that their goal was to avoid seq..estration. SO the TEOL .~p ;linod 

that tit. occurrence of sequestnl!i(>n was DOl necessarily foreseeable. In addition, the Offi"" of 

Management ."d Blidgel had not directed fedenll ag"""i .. '0 begin pbmning forllowthey 

would operate in the ,",'onl of $«j .... tnotion, given that.uch planning, orH:C W><knaken. would 

nt<""";ly diven sear« ~SOUI'tt1 fn:,m o!her impooUnt "8.""Y IoOtivitic.o and pri<H'ities. And 

tho~ same agenoi .. - each of which had rome discretion over how to implement any 

sequestration·relaled ,eduelio,," - had not """"""",d which OO"tl3(:11 would be affected by 

sequestration !Ilowd it occur, Taking into ~unt elOCh oftbex fom, theTEOLS!med that, in 

the.hoe""e of additional infonnation, ony »>temial plan. closintso. layoffs that miahl .0"",,, 

abolu through sequestralion.relaud oonlncl tenninatio ... or CUINc:1<s were SpO<:ulative and 

"",f"",-.abl •. WARN Act noIias, the TEGLconcludtd, wtTe IV)[ ~;red 60 d .. y, in advanu 

of January 2, 2013. 

Tho TEOL also mak .. <:I.,.,., though. that the prospect of ""'Iue.trlItion was pan oh 

dynamic, ongoin& process, and thl! addilional infonnalion - $UCh as fPeCific information OiIlO 

how on agency will imp! ...... "1 sequestnulon - would make the pOSSibility of pi"", d osi"ll' <H' 

loyof1'5 I ... lpeculativeand more fon:Kellbk, In !bat event, employ'''' may be rtquinxlto 

provide notice even if;1 were not possibk 10 give ;1 for the full 6G-day period . 

• 
15 

It i, irnportantto keep in mind lh.aI a TIJini"i and Employment Guidance Lett .. i.1II 

inteqnti.-e aid for SIaIC Workforce A~ .,.j Ih<it .crn;nismolOlfS .m liaillOllS who, 00. 

daily basi" field qijcstions from rederal contr8ClOlfS and hel" .... ,ke .. wbo arediJlocoled by pant 

cloUnp.,.j ..-11)'O"s. Thtc TEGL don 10:)( ~ \lilt fed<nl eo.\trIetOr1 do noI ......J 10 

l.alte tbe WARN Act iolO oc:eow\l when c.onsideri", tho OOI\SCIIl''''''<:elI ora pouible seq .... tn!itlll. 

The lII>or Dqoonment .• role under die WARN Act iI. D><><Icst1:o.ll impoNntone. 

WARN Act ""Me. lI<"fVe ... e~ln:mtly impol"\alltl"'fPO'C', and !he DeparbneJ>1 iI o;omm.itted to 

helpi ... enswe thIt !hey ... pruvi&d ;" 1IPP'""I'ri~ cir<1ItIUIPIOCS, lhoui/> ..... ""Illations lind 

&U~. 8\11 wellto rocogni", thIt WARN Act 1IOtice. <IrInOC be !&ken IjK ~y. P'rovidi"l 

ouclI nolioc 10 ....ten ..t>o we not liuly to lose their jobI can hove II least tJI«e uruortllflllt 

Conxq\let1CCl: 

11 CUI IIIItICOCSArily di!II"Upl the Ii ..... of """"" n \heir flmillca; 

It WI be disruptive ror cm"I0"., .. becMl$e thoy risk iosinK work ... who, rearinl!he 

i........u..e lou of""llrk, mi,p. look for and fond olhtr}obl, and 

laon wute aov.....,.,.nt resourcq by rorcinSStll<: Dislocoted Wmcr Units 10 

provide qopId rc:sponx ac:tiYitiea 10 indivdull. who do noI K"tUally .-Ilhem. 

Thoe are .erious consequcr>oco thai . boukl be avoid..;!. M the I.><partmcnt ~ pn:vi.,....ly 

~ eo..g..:. in ~ \he WARN Mt did lIOII inlend for employen to provide 

overbroad lIOIicc. 

Let .... close by "')'ina IhM 0I,Ir onaI)'1it I!Id &oidanI:c 'oprdina \he WARlII Ac!', 

. ""Iication 10 1Ieq .... tntion wu and i. <'OfT«\, and ..... kef! and !he: Stile Workfo"", S~em 

1\&", botm _LlICIVCd •• result.. F'und'I WCR lIOII seq_em! 011 JatI'*Y 2. 2013; no. ......, 

c:ontnloC:b tl'l"!nl""led, pi ... !! "'.tletod, or, 10 our bIowltdV, unneeClJaty lid""""" IIOIlces .. nt 

, 
16 

Chairman WALBERG. Mr. Notestine. 

STATEMENT OF KERRY NOTESTINE, SHAREHOLDER, 

LITTLER MENDELSON 

Mr. NOTESTINE. Thank you, Chairman Walberg, Ranking Member Courtney, members of the subcommittee. 

My name is Kerry Notestine. I am a shareholder in the Houston 

office of Littler Mendelson, the nation’s largest law firm exclusively 

devoted to representing management in employment matters. I 

want to focus my time with you today on the uncertainty regarding 

employers’ obligations to comply with the Worker Adjustment and 
17 

Retraining Notification Act, or WARN, in response to the potential 

upcoming sequestration. 

As you may know, the WARN Act requires certain employers to 

provide their employees and government entities with 60-days advanced notice of mass layoff or plant closings, and subjects those 

who fail to provide notice with harsh penalties, including 60 days 

back pay plus benefits to affected employees, $500-a-day penalties 

to local government where the event occurred, and attorney’s fees 

and litigation. 

WARN was enacted with workers in mind. The express purpose 

of the act is to provide workers and their families advance notice 

of potential job losses in order to give them time to adjust to the 

prospective loss of employment, seek and obtain alternative jobs, 

and, if necessary, enter skills training or retraining that will allow 

them to successfully compete in the job market. For this reason in 

the past the Department of Labor consistently has advocated employers should provide as much notice as possible for WARN 

events. 

Even President Obama while in the Senate advocated broadening 

the requirements of WARN to prevent employers from using what 

he called loopholes in the act to withhold notice. Specifically, in 

May 2008 at a hearing of a Senate Committee on Health, Education, Labor and Pensions, then-Senator Obama gave a prepared 

statement urging employers to provide as much notice as possible, 

even in ambiguous situations, stating that workers in their communities have the right to know when they are facing a serious risk 

of plant closing. 

The upcoming sequestration arguably imposes just such a risk on 

thousands of federal contractors, subcontractors and their employees. Nevertheless, the Department of Labor in its July 30, 2012 

guidance addressing federal contractor obligation under WARN, is 

taking a very different position than years’ past. Advocating that 

contractors should provide no notice in advance of sequestration 

due to the uncertainty regarding whether those automatic cuts will 

take place at all, and if they do, when and where those spending 

cuts will occur. 

According to the Department of Labor, such uncertainty provides 

contractors with a statutory exception from complying with WARN, 

that is the unforeseen business circumstances exception. The OMB 

subsequently released its own guidance indicating that federal contractors who heed the Department of Labor’s advice will be permitted to recover their liability and litigation costs from the contracting agencies. 

While the Department of Labor and OMB guidance appear to 

benefit employers by potentially relieving them of obligations under 

WARN, I would note that they appear to do so at the expense of 

thousands of employees who, as President Obama put it, deserve 

to know when their jobs are in jeopardy. 

Additionally, circumstances have changed since the DOL issued 

its opinion 6 months ago. Sequestration appears more likely to 

occur this time around. And new information is coming out every 

day regarding where the government will be implementing these 

cuts. The chances of employers successfully claiming that layoffs 

and plant closings are unforeseeable are diminishing every day. 
18 

Finally, DOL and OMB guidance failed to disclose three key 

points that employers need to know when considering their obligations under WARN. 

First, they fail to disclose that the DOL’s guidance is not binding 

on federal courts, those entities that are responsible for enforcing 

the act. We cannot say what about of deference, if any, a court will 

give the DOL’s opinion in this matter, and it is therefore entirely 

possible that a contractor will heed the DOL’s opinion only to find 

that a federal court disagrees and subjects it to significant liability. 

Second, they failed to mention that employers must give as much 

notice as possible once the layoff or closure becomes reasonably 

foreseeable. And along with that notice they must provide a brief 

statement explaining the reason for reducing the notification period. Importantly, without this additional statement, the statutory 

exception relied upon by the DOL becomes unavailable. 

Third, they failed to mention that notwithstanding federal 

WARN there are numerous other potential areas of liability that a 

contractor may be subjecting itself to by failing to provide notice. 

For instance, many states have their own mini-WARN statutes 

that contain different eligibility requirements and notice periods. 

Some states, like California and New Jersey for example, don’t include in their statute an exception for unforeseen business circumstances. 

Additionally, employers may have contractual notice obligations 

under collective bargaining agreements or individual employment 

agreements. DOL and OMB fail to mention any of these potential 

liability areas, leaving employers uncertain about their responsibilities. 

More importantly, these three critical omissions may have 

some—leave some contractors with the mistaken belief that by following DOL’s guidance they are free from potential liability; a fact, 

which I have described is not the case. 

Chairman Walberg, Ranking Member Courtney, I thank you 

again for inviting me. I am happy to answer any questions that you 

have. 

[The statement of Mr. Notestine follows:] 

Prepared Statement of Kerry E Notestine, Esq., 

Littler Mendelson, P.C. 

Good morning Chairman Walberg, Ranking Member Courtney and distinguished 

members of the subcommittee. Thank you for the invitation to be here before you. 

My name is Kerry Notestine, and I am pleased to provide this testimony to address 

the issues surrounding the effects of sequestration on American workers and employers. Specifically, I will address issues related to the WARN Act and other legal 

obligations associated with reducing a company’s workforce because of contract cancellation. I am a Shareholder/Partner with Littler Mendelson, P.C., the world’s largest labor and employment law firm representing management. With over 950 attorneys and 56 offices nation and world-wide, Littler attorneys provide advice, counsel 

and litigation defense representation in connection with a wide variety of issues affecting the employee-employer relationship. Additionally, through its Workplace Policy Institute, Littler attorneys remain on the forefront of political and legislative developments affecting labor, employment and benefits policy and participate in hearings such as this in order to give a voice to employer concerns regarding critical 

workplace issues. Nevertheless, the comments I provide today are my own, and I 

am not speaking for the firm or the firm’s clients.1
19 

I. Executive Summary 

With the January 1, 2013 passage of the American Taxpayer Relief Act of 2012, 

Congress addressed the expiration of the Bush-era tax cuts, but delayed resolution 

of the automatic spending cuts known as ‘‘sequestration.’’ Defense and other federal 

contractors stand to be significantly impacted by massive budget cuts that, by virtue 

of the new law, are now scheduled to begin on March 1, 2013, unless Congress acts 

before then. If the sequestration of federal funds occurs, affected employers face potentially dramatic cuts in federal contracts and, as a possible result, may need to 

implement significant furloughs or layoffs, or even close some facilities. The prospect 

of sudden and dramatic downsizing raises important employment law concerns, including the requirement under the Worker Adjustment and Retraining Notification 

(WARN) Act that employers provide employees 60 days’ advance notice of certain 

mass layoffs and plant closings, or face significant penalties. 

On July 30, 2012, the U.S. Department of Labor (DOL) issued Training and Employment Guidance Letter No. 3-12, which offered guidance on the applicability of 

WARN to potential layoffs by federal contractors in the wake of sequestration. The 

DOL guidance letter concluded that, given the federal WARN unforeseeable business circumstances exception, employers would not be required to provide the Act’s 

full 60-day notice period and the obligation to provide notice would not be triggered 

until specific layoffs or facility closures became reasonably foreseeable. In addition 

to the DOL’s guidance letter, the President’s Office of Management and Budget 

(OMB) issued a memo on September 28, 2012, stating that compensation, litigation 

and other costs resulting from federal WARN Act liability for those employers who 

followed the DOL guidance letter would qualify as allowable costs and be covered 

by the contracting agency. 

While these statements would appear to benefit employers by potentially relieving 

them of obligations under WARN, lawmakers and commentators have rightfully expressed concern and skepticism about the DOL’s legal conclusions (as it is not clear 

what degree of deference courts will give the DOL’s guidance letter) and about the 

authority of the OMB to cover resulting litigation costs. In addition, these statements undermine retraining and advance notice benefits that workers would receive 

if employers provided 60-day WARN notice. My testimony addresses those concerns 

in additional detail. 

II. Introduction 

I am a member of the Texas state bar and board certified by the Texas Board 

of Legal Specialization in labor and employment law. In my practice, which is based 

in Houston, Texas, I have represented employers across the country in all aspects 

of employment matters, including litigation under federal, state, and local statutes 

and common law; administrative proceedings before various federal and state government agencies; and counseling employers regarding employment issues, particularly issues related to business restructuring and reductions-in-force (RIF). I am the 

Co-Chair of Littler’s national practice group on business restructuring, and have advised clients on hundreds of RIF’s including assisting employers with compliance 

issues under WARN, the Older Worker Benefit Protection Act, and the many federal, state, and local anti-discrimination laws. I also have represented clients in litigation resulting from RIF’s, including acting as lead defense counsel in a class action alleging WARN Act violations as a result of a client’s 1,800-person mass layoff. 

Together with other attorneys from Littler, I have drafted a 50-state survey of release requirements by which employers must abide when conducting layoffs. My experience in advising clients with respect to RIF’s and alternative cost-cutting measures gives me considerable insight into the legal challenges defense and other government contractors face because of the looming sequestration. 

III. Sequestration 

The Balanced Budget and Emergency Deficit Control Act of 1985 (BBEDCA), as 

amended by the Budget Control Act of 2011 (BCA), 2 U.S.C. 901a(7)(A) and (8), required that, in the event the Joint Select Committee on Deficit Reduction (i.e., 

Super Committee) failed to produce deficit reduction legislation with at least $1.2 

trillion in cuts, then Congress could grant a $1.2 trillion increase in the debt ceiling, 

but this would trigger across-the-board cuts in both mandatory and discretionary 

spending by reducing both non-exempt defense accounts and non-exempt non-defense accounts by a uniform percentage. Following the Super Committee’s announcement on November 21, 2011 that it had failed to reach bipartisan agreement on deficit reduction legislation, sequestration became an apparent inevitability—set to 

automatically occur on January 2, 2013, unless Congress took action to avoid its effects. This deadline and the negotiations leading up to it became commonly referred 

to as the ‘‘fiscal cliff.’’ However, with only one day remaining before reaching the 
20 

fiscal cliff, Congress passed the American Taxpayer Relief Act of 2012. Seen as a 

temporary resolution to the fiscal cliff, the act delayed the effects of sequestration 

until March 1, 2013. 

IV. The WARN Act 

Leading up to the January 2013 fiscal cliff deadline, several U.S. employers with 

large federal contracts began publically questioning whether and to what extent 

they would be required to comply with the Worker Adjustment and Retraining Act 

(WARN), 29 U.S.C. §§ 2101-2109, a federal law requiring employers to provide employees with advance notice of mass layoffs and plant closings. In a nutshell, WARN 

requires employers with 100 or more employees to give at least 60 days’ advance 

notice of either a plant closing or mass layoff (i.e., a ‘‘WARN Event’’). The Act defines a plant closing as the termination of 50 or more employees at a single site, 

and defines a mass layoff as a layoff involving either 500 employment terminations 

at a single site of employment, or, if fewer, 50 or more employment terminations 

that constitute 33% of those working at a single site of employment. 

The purpose of WARN is to provide advance notice of potential job losses to workers and their families, in order to allow them some transition time to adjust to the 

prospective loss of employment, to seek and obtain alternative jobs and, if necessary, 

to enter skill training or retraining that will allow these workers to successfully 

compete in the job market. WARN also provides for notice to State dislocated worker units so that dislocated worker assistance can be promptly provided. 

Where there will be a WARN Event, there are very technical requirements for 

both the notice which must be given, how it is delivered, and to whom it is given. 

The Act requires an employer to notify several different entities or individuals. See 

20 CFR § 639.7. If the facility is unionized, the employer must give written notice 

to the chief elected officer of the exclusive representative or bargaining agent of the 

affected employees.2 Notice for unionized employees must include: (a) the name and 

address of the affected employment site and the name and telephone number of a 

company official to contact for further information; (b) a statement indicating 

whether the shutdown or layoff is expected to be permanent or temporary and, if 

the entire plant is to be closed, a statement to that effect; (c) the expected date of 

the first separation and schedule of anticipated separations; and (d) the job titles 

of positions to be affected and the names of workers currently in those positions. 

20 CFR § 639.7(c). 

In non-union facilities or departments, and with respect to employees not represented by a union, an employer must provide written notice individually to each 

employee who reasonably may be expected to lose employment.3 Written notice to 

each affected, non-unionized employee must include: (a) a statement indicating 

whether the shutdown or layoff is expected to be permanent or temporary and, if 

the entire plant is to be closed, a statement to that effect; (b) the expected dates 

when the individual employee will be terminated or laid off and when mass layoffs 

or the plant closing will commence; (c) an indication of whether bumping rights 

exist; and (d) the name and telephone number of a company official to contact for 

further information. 20 CFR § 639.7(d). 

An employer must also notify the state dislocated worker unit and the chief elected official of the local government where the closing or layoff will occur. 29 U.S.C. 

§ 2102(a)(2). This written notice to the government must contain: (a) the name and 

address of the affected employment site and the name and telephone number of a 

company official to contact for further information; (b) a statement indicating 

whether the shutdown or layoff is expected to be temporary or permanent and, if 

the entire plant is to be closed, a statement to that effect; (c) a schedule of layoffs 

or terminations; (d) the job classifications of affected positions and the number of 

employees in each such position; (e) an indication of whether bumping rights exist; 

and (f) the name and address of each union and chief elected officer representing 

affected employees. 20 CFR § 639.7(e).4

WARN subjects employers who fail to abide by the Act’s requirements to significant penalties, including 60-days’ back pay plus benefits for all affected employees, 

$500 a day to the local government where the reduction in force occurred, and attorneys’ fees in litigation. 

Accordingly, in the summer of 2012, defense industry and other government contractors and subcontractors began considering their obligations under WARN when 

anticipating the effects the automatic sequestration cuts would have on their government contracts and, by extension, their workforces. 

V. DOL Guidance and the Unforeseeable Business Circumstances Exception 

In response to these concerns, on July 30, 2012, the Department of Labor (DOL) 

issued its Training and Employment Guidance Letter No. 3-12, addressing the 
21 

WARN Act’s requirements in the event of sequestration.5 The DOL concluded that 

federal contractors were not required to provide WARN Act notices to potentially 

thousands of employees 60 days in advance of sequestration (which would have been 

on or about November 2, 2012) because of uncertainty about whether Congress 

would act to avoid sequestration and if they did not act, what effect the sequestration would have on particular governmental contacts. 

A. Unforeseeable Business Circumstances 

In advising employers not to provide advance notice of potential layoffs, the DOL 

relied on the ‘‘unforeseeable business circumstances’’ exception to the WARN Act. 

This exception allows an employer to provide fewer than 60 days’ notice if a plant 

closing or mass layoff was caused by business circumstances not reasonably foreseeable at the time that a 60-day notice would have been required. 29 U.S.C. § 

2102(b)(2)(A). The Code of Federal Regulations provides that an important indicator 

of a business circumstance that is not reasonably foreseeable is that the circumstance is caused by ‘‘some sudden, dramatic, and unexpected action or condition 

outside the employer’s control.’’ 20 CFR § 639.9(b)(1). Examples of such circumstances include a client’s sudden and unexpected termination of a contract, a 

strike at a major supplier, unanticipated and dramatic economic downturn, or a government-ordered closing of an employment site that occurs without prior notice. Id. 

It is an employer’s reasonable business judgment, rather than hindsight, which 

dictates the scope of the unforeseeable business circumstances exception. Loehrer v. 

McDonnell Douglas Corp., 98 F.3d 1056, 1061 (8th Cir. 1996). As such, courts evaluate whether a ‘‘similarly situated employer in the exercise of commercially reasonable business judgment would have foreseen the closing’’ when determining whether 

a closing was caused by unforeseeable business circumstances. Hotel Employees 

Int’l Union Local 54 v. Elsinore Shore Assocs., 173 F.3d 175, 186 (3d Cir. 1999). 

Thus, the WARN Act provides flexibility for predictions about ultimate consequences 

that, though objectively reasonable, may prove to be wrong. See Halkias v. General 

Dynamics Corp., 137 F.3d 333, 336 (5th Cir. 1998), cert. denied, 525 U.S. 872 (1998) 

(observing that the ‘‘reasonable foreseeability’’ standard envisions the probability, 

not the mere possibility, of an unforeseen business circumstance). 

In the context of defense contracts, several courts have found that the unforeseeable business circumstances exception exempted an employer from providing notice. 

International Ass’n of Machinists & Aerospace Workers v. General Dynamics Corp., 

821 F. Supp. 1306 (E.D. Mo. 1993) (Within the unique context of defense contracting 

it is rare for the government to cancel contracts despite delays and cost overruns. 

Therefore, it was a commercially reasonable business judgment to conclude that the 

contract would not be canceled, and the subsequent cancellation qualified as an unforeseeable business circumstance.). Nevertheless, even under this exception, notification is required as soon as practicable along with a brief statement of the basis 

for reducing the notification period. 29 U.S.C. § 2102(b)(3). 

VI. What the DOL Guidance Doesn’t Tell Employers 

A. Additional Notice Requirements under the Unforeseeable Business Circumstances Exception 

The statutory section of WARN that makes the unforeseeable business circumstances exception available to employers has an additional notice requirement 

when the exception is to be invoked: An employer relying on this subsection shall 

give as much notice as is practicable and at that time shall give a brief statement 

of the basis for reducing the notification period. 29 U.S.C. §2102(b)(3). The DOL 

Guidance fails to mention that employers are still required to provide some advance 

notice upon the employer’s realization of a WARN Event (even if the exception allows for less than 60 days’ notice) and that the notice must specify why the employer reduced the notification period. 

Importantly, failure to give this required brief statement in the written notice has 

very severe consequences: The statutory exception becomes unavailable. Childress 

v. Darby Lumber Co., 126 F. Supp. 2d 1310, 1318 (D. Mont. 2001), aff’d, 357 F.3d 

1000 (9th Cir. 2004); Grimmer v. Lord Day & Lord, 937 F. Supp. 255, 257-58 

(S.D.N.Y. 1996); see also, Alarcon v. Keller Industs., Inc., 27 F.3d 386, 389-90 (9th 

Cir. 1994). Thus, employers relying solely on the DOL’s Guidance may not provide 

written notice at all, or may provide notice lacking the brief statement, in which 

case the exception is no longer available. 

B. Authority of DOL to Issue Its Guidance 

It is highly questionable whether the DOL even has authority to issue its Guidance in this instance. Indeed, the WARN regulations specifically provide that ‘‘[t]he 

Department of Labor has no legal standing in any enforcement action and, there-
22 

fore, will not be in a position to issue advisory opinions of specific cases.’’ 20 CFR 

§ 639.1(d) (emphasis added). On the contrary, the regulations provide that the federal courts are the sole arbiters of WARN compliance and thus, the DOL’s opinion 

is not binding on these courts. As a result, it is unclear what amount of deference, 

if any, a court would apply to such an opinion. 

Indeed, in the past when the DOL has tried to issue specific guidance with respect 

to WARN requirements, the Department has made it clear in the guidance that its 

answers were not binding on courts. For example, in a Fact Sheet issued by the 

DOL following Hurricane Katrina, the Department specifically warned that its Fact 

Sheet responses ‘‘represent the U.S. Department of Labor’s best reading of the 

WARN Act and regulations,’’ and ‘‘employers should be aware that the U.S. Federal 

Court solely enforces the Act and these answers are not binding on the courts.’’ Notably, the DOL provided no such disclaimer in the guidance regarding sequestration. 

VII. Why Courts May Independently Determine that the Unforeseeable Business Circumstances Exception Does Not Apply to Sequestration. 

While the Department of Labor has no enforcement responsibility, the agency did 

promulgate regulations regarding WARN. See 20 CFR § 639. These regulations indicate that employers are encouraged, even when not required, to provide advance notice to employees about proposals to close a plant or significantly reduce a workforce. 20 CFR § 639.1. Furthermore, in its regulations, the Department of Labor concedes that the statute can be very vague when an attempt is made to apply WARN 

to a specific situation. The regulations read in part: 

In practical terms, there are some questions and ambiguities of interpretation inherent in the application of WARN to business practices in the market economy that 

cannot be addressed in these regulations. It is therefore prudent for employers to 

weigh the desirability of advance notice against the possibility of expensive and 

time-consuming litigation to resolve disputes where notice has not been given. The 

Department encourages employers to give notice in all circumstances. 

20 CFR § 639.1(e) (emphasis added). Moreover, in the Fact Sheet the DOL issued 

following Hurricane Katrina, the Department advised employers to provide ‘‘as 

much notice as possible,’’ even in situations where the hurricane had destroyed the 

employer’s plant and all employment records were gone. According to the DOL, providing some form of notice (even by posting in a public place, publishing in a newspaper, or mailing to the employees’ last known addresses) showed the employer’s 

good faith compliance with WARN.6

Thus the recent DOL Guidance on sequestration strangely contravenes the Department’s own past advice, as well as the express purposes of the WARN Act. 

Again, according to the Department’s own regulations: 

Advance notice provides workers and their families some transition time to adjust 

to the prospective loss of employment, to seek and obtain alternative jobs and, if 

necessary, to enter skill training or retraining that will allow these workers to successfully compete in the job market. WARN also provides for notice to State dislocated worker units so that dislocated worker assistance can be promptly provided. 

29 CFR § 639.1(a). The current DOL Guidance, meanwhile, advocates providing 

no notice, stating that providing notice to workers who may not ultimately suffer 

an employment loss, ‘‘both wastes the state’s resources in providing rapid response 

activities where none are needed and creates unnecessary uncertainty and anxiety 

in workers,’’ both of which the DOL now claims ‘‘are inconsistent with the WARN 

Act’s intent and purpose.’’ 

Indeed, the DOL Guidance appears to even contravene President Obama’s assessment of what protections WARN should provide. On May 20, 2008, the Senate Committee on Health, Education, Labor and Pensions held a hearing examining plant 

closings and focusing on workers’ rights and the WARN Act’s 20th anniversary. 

During the hearing, a then-Senator Obama remarked on his days as a community 

organizer working on the south side of Chicago helping people in communities affected by steel plant closings get back on their feet. According to Senator Obama, 

one of the things he learned early on, and saw over and over again, was that ‘‘American workers who have committed themselves to their employers expect in return 

to be treated with a modicum of respect and fairness.’’ He therefore reasoned that 

‘‘failing to give workers fair warning of an upcoming plant closing ignores their need 

to prepare for the transition and deprives their community of the opportunity to 

help prevent the closing.’’ 7 Furthermore, in his closing remarks, Senator Obama 

reasoned: 

Workers and their communities have a right to know when they are facing a serious risk of a plant closing. Making that information available before the plant closes 

can, in the best case scenario, help communities come together to prevent the loss 
23 

and, in the worst case scenario, help workers and communities prepare for the difficult transition to come. 

Clearly, President Obama felt that workers facing potential separation from employment deserved advance notice, regardless of whether the WARN Act required 

such notice. The DOL now appears to take an about-face to this position, encouraging employers to withhold advance notice, even where the notice may be able to 

assist the workers (and their communities) to prepare for the potential transition 

to come. While the DOL is understandably concerned that some employees may suffer unnecessary anxiety by receiving a notice and then not suffering an employment 

loss, such concern fails to protect those employees who actually do suffer an employment loss. 

Furthermore, the DOL’s new position seems to conflict with its own past advice 

that providing some notice, even conditional notice, is better than providing no notice at all. Indeed, the DOL’s regulations specifically allow employers to issue conditional notice: 

Notice may be conditioned on the occurrence or non-occurrence of an event, such 

as the renewal of a major contract, only when the event is definite and the consequences of its occurrence or nonoccurrence will necessarily, in the normal course 

of business, lead to a covered plant closing or mass layoff less than 60 days after 

the event. For example, if the non-renewal of a major contract will lead to the closing of the plant that produces the articles supplied under the contract 30 days after 

the contract expires, the employer may give notice at least 60 days in advance of 

the projected closing date which states that if the contract is not renewed, the plant 

closing will occur on the projected date. 

20 CFR § 639.7(a)(3). Similarly, courts reviewing this issue may ultimately determine that employers should have provided 60 days’ conditional notice to employees 

in advance of the sequestration, stating that, in the event sequestration occurs and 

funding to a particular project is cut, the plant closing or mass layoff will occur on 

a projected date. Although the regulations state that the notice must be specific, 

they also provide that the notices must be based on the best information available 

at the time notice is given. 20 CFR § 639.7(a)(4). Thus, a court will look to the individual circumstances and what information the employer had available at the time 

to determine whether a ‘‘similarly situated employer in the exercise of commercially 

reasonable business judgment would have foreseen the closing.’’ See Hotel Employees Int’l Union Local 54, 173 F.3d at 186 (3d Cir. 1999). 

Finally, courts may find it hard to agree with the DOL’s six-month-old advice that 

sequestration is an unforeseeable business circumstance. Specifically, the Guidance 

states that ‘‘even the occurrence of sequestration is not necessarily foreseeable’’ and 

‘‘Federal agencies, including DOD, have not announced which contracts will be affected by sequestration were it to occur.’’ While that may have been true with respect to the January 2 deadline, as the new March 1 deadline looms closer, it appears far more likely that the cuts will actually go into effect this time around. Indeed, even House Budget Committee Chairman Paul Ryan has publically stated his 

belief that ‘‘the sequester is going to happen.’’ 8 Likewise, additional information is 

being released every day with respect to where the cuts will likely take place. For 

example, just last week, our nation’s military branches released documents outlining their proposals for complying with the sequestration. As more information becomes available, courts are more and more likely to find that employers who fail 

to provide advance notice of resulting plant closures and layoffs are in violation of 

WARN and less likely to apply the unforeseeable business circumstances exception. 

VIII. The OMB Guidance Only Raises Additional Questions 

Further confusing the issue for employers, on September 28, 2012, the President’s 

Office of Management and Budget (OMB) issued its ‘‘Guidance on Allowable Contracting Costs Associated with the Worker Adjustment and Retraining Notification 

(WARN) Act’’ to address whether federal contracting agencies would cover WARN 

Act-related liability and litigation costs. The OMB stated in its Guidance that: 

If (1) sequestration occurs and an agency terminates or modifies a contract that 

necessitates that the contractor order a plant closing or mass layoff of a type subject 

to WARN Act requirements, and (2) that contractor has followed a course of action 

consistent with DOL guidance, then any resulting employee compensation costs for 

WARN Act liability as determined by a court, as well as attorneys’ fees and other 

litigation costs (irrespective of litigation outcome) would qualify as allowable costs 

and be covered by the contracting agency, if otherwise reasonable and allocable. 

While the OMB Guidance appears to be aimed at reassuring employers by promising them indemnification against potential WARN-related liability, attorneys’ fees 

and litigation costs in the event they follow the DOL Guidance by failing to issue 

WARN notices, the OMB Guidance may unintentionally be providing employers 
24 

false assurances that all liability and litigation costs will be covered. Specifically, 

Federal WARN is only one avenue amongst several that employees may take to 

challenge the results of a reduction-in-force and seek damages for failure to provide 

advance notice. Other areas of potential liability include state Mini-WARN laws and 

laws requiring advance notice of changes to employee pay and/or hours worked, as 

well as contractual obligations found in collective bargaining agreements and individual employment agreements. It is not clear whether and to what extent the OMB 

Guidance provides for indemnification of these potential liability areas. 

A. State Mini-WARN Acts and Other State Law 

Approximately twelve states have ‘‘mini-WARN’’ acts that provide additional requirements beyond what Federal WARN requires. California, for example, applies 

different threshold requirements under its state law—requiring notice from facilities 

employing 75 or more individuals within the preceding 12 months (rather than 100 

individuals under Federal WARN). CAL. LAB. CODE §§1400—1408. Additionally 

under California law, a layoff of 50 or more employees within any 30 day period 

(regardless of percentage at the facility) is a mass layoff, and any shutdown of a 

covered facility is a plant closing, regardless of the number of employment losses. 

Id. As a result, employees whose jobs are eliminated in California may qualify for 

protection under the state’s mini-WARN act but not qualify for protection under 

Federal WARN. Other states such as Illinois, Iowa, New Hampshire, and Wisconsin 

require 60 days’ advance notice for layoffs involving as few as 25 employees. 820 

Ill. Comp. Stat. 65/1-99 (2008); Ill. Admin. Code tit. 56, § 230 (2008); Iowa Code §§ 

84C.1-84C.5 (2011); N.H. Rev. Stat. Ann., Chapter 275-F; Wis. Stat. § 109.07(1)(b). 

Other states require more notice than the Federal WARN’s 60-days. New York, for 

example, requires 90 days advance notice of WARN Events and applies to companies with as few as 50 employees. NY LAB. LAW §860 McKinney (2008). New Jersey WARN, meanwhile, provides an additional penalty for noncompliance in addition to the 60 days’ back pay—employers are required to provide one week’s pay for 

each full year of an employee’s service. This is significantly greater than the federal 

WARN Act’s remedy of paying lost wages (back pay) for a maximum of 60 days. 

In addition to Mini-WARN laws, many states impose additional severance obligations on employers undertaking layoffs, outside the context of WARN. Connecticut, 

for example, has an statute requiring that for certain closings, the employer must 

pay for 100% of health care coverage for employees and dependents, to the extent 

that they are covered, for up to 120 days. CONN. GEN. STAT. §§ 31-51(n), 31-51(o), 

31-51(s) (2008). Maine employers, meanwhile, must provide employees 60 days’ notice in advance of a cessation of operations and severance pay computed at one week 

per year of service, payable to employees who have been employed at least three 

years. ME. REV. STAT. ANN. tit. 26, § 625-B. 

Finally, where sequestration results in employee furloughs or reductions in employee hours and/or pay, there are other legal issues that an employer must consider. In furlough cases, it is advisable to provide advance notice to employees and 

have employees sign an agreement regarding the terms of the furlough. If the employer wishes the time to be unpaid, it should expressly inform employees, preferably in writing, not to do work while on the furlough.9 Some state laws require 

advance notice of changes in pay (the longest being a 30-day advance notice obligation in Missouri), and it is unresolved whether placing employees on an unpaid furlough may trigger those notice obligations. Employers arguably may have an excuse 

for failing to provide required notice for reasons similar to those addressed above 

related to WARN obligations, but employers are advised to provide as much notice 

as possible to maintain defenses to these notice obligations. 

The DOL does not purport to address such state laws in its Guidance (and, indeed, the DOL Guidance would do very little to protect employers in states like California or New Jersey where there is no comparable state-based exception for unforeseeable business circumstances). However, it is disconcerting that the DOL fails to 

even mention in its Guidance that failing to comply with the notice requirements 

under Federal WARN may subject employers to additional liability under state law. 

Such omission may leave some employers with the mistaken belief that, by following 

the DOL’s Guidance, they are absolved of any potential liability—a belief which 

those same employers may believe is supported by the OMB Guidance. 

In fact, it is entirely unclear from the language of the OMB Guidance whether 

contracting agencies would indemnify employers of this additional state-based liability. Specifically, the OMB states that its guidance ‘‘does not alter existing rights, 

responsibilities, obligations, or limitations under individual contract provisions or 

the governing cost principles set forth in the Federal Acquisition Regulation (FAR) 

and other applicable law. 
25 

B. Collective Bargaining and Contractual Agreements 

In addition to state requirements, the National Labor Relations Act and collective 

bargaining agreements may require advance notification to unions representing employees and bargaining about the effects of a layoff due to sequestration. Additionally, employers may have entered employment agreements with certain employees, 

providing advance notice of separation. In both cases, compliance with the DOL 

Guidance would not necessarily address these additional contractual obligations. In 

the case of furloughed employees, employers may have obligations to bargain with 

unions representing furloughed employees or may have obligations under existing 

individual employment agreements that should be considered. In the event a grievance is filed by a union representative receiving only 5 days’ notice of a plant closing, will contracting agencies indemnify employers for that? Will they indemnify for 

any breach of contract issues arising from an individual’s employment agreement? 

Although the answer is likely no, often such claims are brought in conjunction with 

claims under the WARN Act. If an employee brings a lawsuit to assert both a contractual claim and a WARN Act claim, how will the contracting agency go about indemnifying the employer for litigation costs surrounding one cause of action and not 

the other? 

C. How Will the Litigation Costs be Covered? 

Other than stating that employee compensation costs, attorneys’ fees and other 

litigation costs ‘‘would be covered by the contracting agency,’’ the OMB Guidance 

provides very little actual guidance to employers regarding how the indemnification 

process will actually work. For instance, will the contracting agency be covering the 

costs of litigation from its inception? Or will it wait until the case is resolved and 

reimburse costs at that time? The former option raises questions regarding what 

level of input or oversight the contracting agency will have over the selection of 

legal counsel. For instance, will government attorneys be required, or will the employers be allowed to select their own outside counsel? Will the contracting agency 

pay whatever hourly rates legal counsel is charging or will the employer/attorneys 

be provided guidelines regarding what is ‘‘otherwise reasonable and allocable?’’ Additional questions are also raised regarding the level of input and oversight into the 

overall litigation strategy. For instance, will the contracting agency have any input 

into whether the employer seeks an early settlement or sees the litigation through 

to trial? 

On the other hand, the latter option (waiting until resolution of the action to indemnify the employer), creates its own issues. For instance, waiting until the end 

of the case to cover costs makes the promise of indemnification illusory for smaller 

employers who likely will be unable to afford paying the up-front costs of hiring a 

law firm and covering litigation expenses and attorneys’ fees through the resolution 

of the case. Indeed, for those contractors or subcontractors whose entire business relies on federal contracts, their inability to pay such extraneous expenses up front 

is likely increased due to reduced revenue from cancelled or modified government 

contracts. 

IX. Conclusion 

The guidances issued to employers by the DOL and OMB regarding WARN compliance have done little to reassure this employment lawyer. Indeed, I cannot understand why the DOL would issue a guidance advising employers to provide less notice rather than more when sequestration is the current law of the land. The OMB 

Guidance further complicates matters by suggesting that employers will have blanket immunity from liability in the event they follow the DOL Guidance—a proposition that may not ultimately be the case. 

Chairman Walberg, Ranking Member Courtney, I thank you again for inviting me 

to testify. 

ENDNOTES

1 I thank Sarah Morton of Littler Mendelson, PC for her preparation of this statement, and 

to Michael Lotito and Ilyse Schuman of Littler Mendelson for their comments on prior drafts 

of this statement. 2This notice should be provided to all entities identified in the collective bargaining agreement as representatives of the bargaining unit employees. Many labor agreements are signed 

by a union local and the international union; notice should be provided to both. Failure to send 

notice to the international union could result in a ruling that notice was ineffective and the employer is liable for full penalties for non-compliance with the Act. 3This includes managerial and non-managerial employees alike. It also includes part-time employees who may be affected, even though such employees are not considered in determining 

whether the plant closing or mass layoff thresholds are reached. 
26 

4 A shortened version of this notice can be given, and if the shortened notice includes the first 

day of layoff and the total number of employees to be laid off, the detailed schedule of layoffs 

and the details of the job classifications and number of occupants of each can be maintained 

at the site for governmental inspection. 20 CFR § 639.7(f). 5 Although the Guidance addresses the effects of sequestration as it was originally set to occur 

on January 2, 2013, Congress voted on January 1, 2013 to extend sequestration until March 

1, 2013. 6The good faith defense referred to there by the DOL is found in 29 U.S.C. § 2104(a)(4). Specifically, it provides that if an employer ‘‘proves to the satisfaction of the court’’ that the act 

or omission which violated WARN was done in good faith and with reasonable grounds for believing that its act or omission was not a violation, ‘‘the court may, in its discretion, reduce the 

amount of the liability or penalty.’’ However, this defense is far from absolute and may only 

reduce the amount of liability—not eliminate it entirely. 7Senator Obama used the hearing to promote the FOREWARN Act, legislation he co-sponsored with Senator Sherrod Brown and then-Senator Hillary Clinton. The purpose of the FOREWARN Act he stated was to enhance WARN protections to ensure that ‘‘workers are not chewed 

up and spit out without a job or a paycheck’’ and to close loopholes in the act allowing ‘‘employers to disregard the WARN Act without penalty.’’ Notably, the proposed FOREWARN legislation 

aimed to provide the Department of Labor with enforcement authority over WARN violations, 

thus recognizing that the current state of the law does not provide the DOL with such authority. 8 Interview with Paul Ryan, Meet the Press (January 27, 2013). 

9Making or answering calls or email, checking voicemail, drafting documents, and similar 

tasks typically are considered work and non-exempt and exempt employees must be compensated for the time spent in such activities. Non-exempt employees may be compensated in 

hourly or less increments depending on the employer’s policy, while exempt employees generally 

must be paid their full salary for the entire workweek if they perform work at any time during 

the workweek. 

Chairman WALBERG. Thank you. 

Mr. Gies. 

STATEMENT OF THOMAS GIES, PARTNER, 

CROWELL & MORING, LLP 

Mr. GIES. Good morning, Chairman Walberg, Ranking Member 

Courtney and other distinguished members of the subcommittee. 

My name is Tom Gies. I am a partner with the Crowell & Moring 

law firm based here in Washington. And I thank you for the invitation to provide testimony this morning. 

Many federal contractors are increasingly apprehensive as we get 

closer to March 1. This anxiety stems in part from ambiguities regarding their obligations under the WARN Act in light of the lack 

of clarity about the specific impacts of the looming sequester. The 

reality facing contractors today, particularly in the defense sector, 

is that the sequester calls into doubt both the availability of funding for future contract awards and the contracting agency’s ability 

to continue funding under many existing contracts. 

The Navy’s cancellation of the A-12 fighter bomber program back 

in 1991 is a cautionary tale. Both McDonnell Douglas and General 

Dynamics had numerous discussions with the Navy over a severalmonth period. This led to several exchanges of proposals and communications, including employee communications issued by both 

contractors, prepared with an eye towards WARN compliance. 

The upshot was that the Navy terminated the contracts with 

only a few days’ notice. Both companies got sued for WARN violations. And neither was vindicated until they went all the way 

through costly trials and federal court. 

Fast forward to March 1. Contractors will soon begin to get more 

specific information about the plans of contracting agencies regarding sequestration. We are aware that the military departments 

within DOD, for example, are currently preparing specific plans. 

But these plans are unlikely to identify particular contracts, options, task orders or other contract vehicles that the military de-
27 

partments may terminate or elect not to proceed upon if sequestration were to occur. 

Without more detail it is doubtful that any contractor can accurately predict today the specific impacts of sequestration on its 

business. But, as information becomes more—becomes available, 

contractors will have to begin making tougher decisions. Mindful of 

legal risks, many companies are likely to conclude they should 

begin providing some sort of notice within the next 2 weeks, or as 

soon as they learn of anything more specific. 

Depending on specific government procurements, one can envision a subsequent wave of conditional notices as more information 

becomes available. These communications will cause significant disruption and confusion, both for employers and employees. Productivity will suffer as employees become increasingly anxious about 

job security. 

There is the very real worry of a major league brain drain at 

some companies. Notwithstanding weaknesses in the overall labor 

market, in the technology sector competition remains fierce for 

highly talented and skilled employees like software design engineers. 

The complexities of WARN compliance itself will add to the challenge facing many companies. Two examples should illustrate that 

problem. Counting the right number of employees who will be affected is often difficult. WARN has arcane aggregation rules requiring a company to consider, in some circumstances, other workforce 

reductions that took place before and after the particular planned 

event in order to determine whether the WARN targets have been 

met. 

WARN likewise makes it difficult to determine, in some cases, 

whether a particular job loss impacts a single site of employment. 

The regulations and case law make razor fine distinctions in situations involving, for example, groups of structures that form a campus or an industrial park, or separate facilities across the street 

from each other. Because each company’s situation is likely to be 

unique we can expect numerous lawsuits filed around the country 

against contractors accused of guessing wrong on a variety of 

WARN issues. 

For many companies their decision about how to manage upcoming layoffs will be driven in part by the government’s position on 

whether the costs associated with workforce reductions will be 

viewed as allowable costs, and thus reimbursed by the government. 

There is no definitive one-size-fits-all answer to the question of 

whether, in the event of sequestration, a contractor’s costs of complying with the WARN Act or of defending against alleged violations of the statute would be deemed allowable by the contracting 

agency. 

That said, a contractor’s costs of complying with the WARN Act 

or of successfully defending its compliance with the statute would 

generally be deemed an allowable cost. The central question and 

the inevitable litigation will be the latest version of the old question of what did they know and when did they know it? 

You have heard testimony about the guidance issued last year by 

the Department of Labor. By its terms that does not of course address the question of what a contractor should do after March 1. 
28 

And as we sit here today, many of even the most sophisticated federal contractors aren’t sure about what to do. 

Chairman Walberg, Ranking Member Courtney, I thank you 

again for inviting me to testify. I would be happy to answer any 

questions. 

[The statement of Mr. Gies follows:] 
29 

St ntcment of 

Thomas I' . Cics, Esq. 

Crowe ll & Moring LLP 

Bc fo l'e t he United Stutes lions!) of RCl'rusontntivos 

Committee on Edu ca tion a nd t he \\'ork fon ;1l 

SullCommiuee o n Workforce Protections 

Hearing 

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n esponsibilitic5 

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layufl"_ 29 lJ.S.C_ § 2101 £!!!!!I_ A pi .. ", do.ing is delin.:" H<" facilil y closure Il,al results;n an 

cmpIO)""'''''' I"", (M 50 or Ill(}re empl"yces. A mass l.y"rr is an cmpl")'Illcnl loss fOf SOO 

c,npl<ry"e". or 33% of the worl<forec. al a .iflCle .ite "f employmen1. 
30 

1."., WARN AOI and il0 i"'pJonlC"I'''il "'il" I .. ,>nn' p<Om" gal~ by lite Departn" "1 of 

!..ow. do nlle ""veral 1""", lhal p('I!M: si&nHkon' ro",pl i"".., '"ue. with ""'p<:<I 'o the: Ih ... to".,d 

"queIIC'. TIlt)' i".,lude· III< doole .. ",i"",i"" of ... 110 i, "" aff«led r:mploycc ('tlCl.,;I;", 11", 

tro.lmonl ofJW\.li ..... emplo)'C<"l); ....... ing III<: conI0OI'S of. "siJlgIc ';tc" of employ"""'I! ar.d 

..iIat c:on .. ;U.J\es. an "emplo)"""nl." for purJ><>5<S oflri~na WAR."II·, obl;S.'ion$. WARN 

"lsu """ .. i". druoilcd ,cq lI~mrnu "ilarWnS the: """tern "(,he """""'" .001;';'" requim! by \lie 

.... I .. UOO Ihc ,noli.idu;ols anti o;1>Iilic. that ... cmiUcd 10 t>Otice.. 

WARN ,,","ides tho.! an employ" flli liJli 10 ai'1: llmoly DOli..., is Ii&bk 10 le,""inllled 

omplo~ r.,.- back pay and hcnofiu ror caoh ~day o rvioLollo .. ; 1,(.. e-:h day d..nn~ .. '!rich Ihc 

emploY"" hII<I no! rocei\'C<l lhe ""'IU;m! noIicc, 1<1 a "",.imum o f 60 day.. 29 U.S.C. 

f 2104{aXI)(A) & (A) IIJ10Ck fl'1)' liabilily ",ay be pff ... 1 by any ""(1. 0 or bt'lCfill paid 1<1 

"mplo ye"'~ durin!; Ih" I"'riOO "f " iulnti,"' , ftnd by any "vnlunUlry and UllOOooilio .... 1 pl)'nlCm" by 

Ih. o"'l'l<»'Ct 1<IIhe employ.., WI;$ nol ""Iuin:d by "'Y kpl oblip ' ion_ WARN provldeJ fn .. 

SSOO" oIay penally 1<> bt poid 10 lhe: Iocol gm'emmeM ... 'here the emp!oymen, lou octut"l'<d. llw! .,.."1,, aiJ(> provides for .nomeyl· fees 1<1 p.-.;vlliling 1'1"1;'" in I~ip.ion lIItdcr. !IaIIdard IhIIt 

""",lei ... 1)' {tI'" ccntraclOt'll an opportum'y to rttO,,,, IlICIr defense coots.. l1Ic SUJ""mt C""" 

has yO{ 10 decide whcIlIcr lhen: it. riahl 10 a jwy InIIl id a WAXH _, .... 10""" """'" ~ 

split 00 the iosuc. C--" &fIIl')J~. Ari" 11_ f'mlflotu. lite .• &61 F. Sow 6$ (I:"D. A"'. 

1!I94) wilif 81_. fAx", W"dlhtlM A/,lInt" lite .. 635 F.3d 136 (/Mh Ci. lOll),"" dtlflt:d 

Ins.a. 11>1 (2011). 

n",,,, arc ..,,,,,nt/ ""I~i()'''I() ~ WARN n<)lice rcqu;romonll. F<>r JII'tpO ... of lhi, 

leSlimon)', tPle n>05t im(lllnnni . ' ''''pllon ;, the pIllYi.;"'" 1""1 " 110 .... 5 on cmplo}'« In I"".;de 

no!kc oflcnthan 60 daY' in 011"""" .. o f . planl .","i t'~ mass layoff .... here lhe cmploy",,,m 

loMe> ... co"oed by hu';nno drewnstar>.:es "'" ",awnably t",,,,,,,,,,bJe. 29 U.S.C. 

f 210~b)(2XA). Th" "_bl,, fo"",,'ftbilily ""ce-plion RqU;res lhe ..... playetlO Ii"" noticc .. 

_ as prxIi<:abk, alona ... ,lit a brier Jlalcm<m ofllK: bui. r.... n:duci", lhe _ if"",,;"" period. 

29 U.S.C. § 2102(b)(3). 

WAIUII rqulal_, \lcfinc ...-..-mabl. r_ability" ... silUIIlioo when: lhe 

cmpl<>ym<-nl Ioos ;, cau~ by ..,.,.,." sud&n, dramalie. .nd """,,~d ... 1;nn nr con<Iil;on 

O\Il.kk: the employer' o """,,,,I." 20 C. F.R. § 6J9.9(b)(I). lli-~mp "" of .... h d",uIllSI ... "", 

IlIChKI< •• lient·_,,..dtlcn lind UIIC>pocted terminali"" of" cont ~," . Irik<: al . major suppher. 

llMtl lo pa d and "",,,,alie CQOf\Om,c 00"'1IIWll, or a 11° • ..""0<:11 1' °,,10,,,,<1 d<.»;n~ of "" 

employn'<:'" .,Ie ,hal ""<:u" withoul prior lIOIi«. 'd, 

1lle employe. J... the bunion of proof as 10 the: ~.JOI\Ibk foreseeabillly" . 

CtlUt\f ","'"..,,, 1Ix: cmplo)'~'f condt..:t under I lOIaIiiY of !be circwn5W>«S 1$, i"'luimla 

wIIe1her lhe ompIo}-", ne",;"",, prudcnI busi ...... judgmtnl in .-ina;1$ "","""", J"'l'PMS. 

Sn (.11. W"'-'. Aklti"", 1..Jo..,"IaII"'ltiing. 311 F.Jd 760 (6· Cit. 2()O:2Xkcy < __ ', 

ccowion of .... rnt:nl~ :md C3I1oC<!ILotioo of cool".;:1 "" shon ""', .. was ,uddr.I and W><Xp<Clo:d). 

,",,,,l I;o ,,r Ij';KI'I;",1 "" Ihi' issue Dilen turns on a very dnse """1)'$'" of 11>1: opcdr." 

bul;nes. th",.L' r""ini lhe: "'ploy , d urini the pori<><! in ,,'hich il ;" "",,,ide,ins .... htthe:r 10 i .. uo 

WA RN nulk~ •. :We. ~.II." i"" S,u' W",,k'so/ ..1 "",1<0 '.t><~1166Q •. u.s. SIc" eMIl., C;,il 

No. O'J-l223 (JRTILl fl). 2011 WL )609490 (D. Minn. Au,. 16, 20 11 ). Tile COut1 1"'= granted 

, 
31 

dlQ ~'~pl"'y<''''' mntio~ for ,un,mary judiffionl 1m 11>0 ""fon,,.,.,.blc busi ..... drtUJII.<lAOCOS 

defen«!, r.nclin~ thai ~'" ."<I<k,, ~<>oomi~ downlurn during d,. um ~~,>d au'''mn of2008 WIIS 

wlr"",..,.,.,blc. In "'Ii"~ for lhe ~nploytr. !be ~U/1 IIl1!«d .. i,h plainlirr, ,ha, the: gCOCI">II 

_ic <I<wontwn was ..-..11 kno"n 60 daY' prior 1O.h< date of."" layurr. in !hal oa.t. 601 \he 

Oi,)I,IrI .0<><1....JM thM !be fflIpIo)'ff was not in a posit;"" 1<1 .ttlici~c .1><: dramatic d« ...... m 

den...-.! from its automobile Indl.lSl/)l e ... wmcn; for <lccl dw. kd \(11k .. ,..,lfs. in iM1t benu .. .... 

\he lII..-.:t\."~ics ....:>eiMed wi.h !he possibilily of IIO~I inlcrvtnlion: "'GiY<n ..... 

[lkfaldam/ .... bal....,inK lhe 1II..,.-.=k,,"'" hiih dcmInd for 11«1 ant;!lbe po$$ibili'y..,f lhe 

iU""mn""l boik>ut of the .. ,'" induury, lh< ohcHrc 10 doilY pl.", closinp [by idlinl 1>1""-

f"","",cl] would "'" b .... " raiood lilt> <y<brow. of any ~nt bow_ 1"'""" (i.e., tho cho,.., 

"'IU co,mn<,....,i.lly n,unn.hlc[." /,l 

"The pl"IIC'ical problem. flld,,!! ...,,,lnlClors in loda1s Cn,·,mnn,.n' ... ill"",,,,lod by lhe 

WARN 1l1isatinn liIod ill ~'" w"". of tho Defe".., Dqwu",,"t". 19'91 d«i.iQn 1<.> ~I'hc A· 

12 ro,ttlEl" bomber ~ 00 olton "",ie<:. lbol htiplion .... mll"";"'" he" ..... <krn<lllS(""'" lhe 

<htoiknic< <OI~ will fOOl' III dt:fcnc!inl_ ant;! w"hctt tl>ty S<d buoi..."., jud&t'''''M Oft 

t1U. i_ Su.. ~g .. 11>llvtr •. Mr-o,-// DoIig/MCorp . 9) f.)d 10.56 (!!"'Cit. 1996). 

StHrai Si.alCl l1li,. mat:lod .. hal ..., called _imes .. fermi 10 as "mini.WARN" 

IIOMei. Some of.hem impo!(' ~ui"lMn" in addi.i"" .... too..: required by WAKN' 

Uni"" i,.ed ~"'rl(>y< .. may f""" O>ddi.innai notice obll~ •• !o", "" a result "r I"""i.",,,, in 

C/}11""th'~ bou-pining "&rttll>CI\1S 'Mt n .. y '"'lui", a specific level of oJ""""" ",,1;';< 10 ~'" ,,",,<II, 

,..,...,.ntinB "mplo)'~t$ ""vcrod b~ 100 -.:recmonl. Unioru. onon """,,11101<: these proviliooo in 

labor.,.",.,.,.,.. in orde, to provide them with surr",ient Ii"", '" bupin with !be anploy.:r.boul. 

tl>O ~rrO£U of the pn>p05Cd jolt 10$$, .. requim:I by Seclion I .... the l.ab1>r A~. R~latloru 

Aot 19 U.S.c. § 11S(.)(5). 

n .. lhrN'....,.j >eq ..... ll!r 1w ",,,,k"',"n,J.bly raiocd lisnificant COIK:CmJ in the rcoon.l 

conlnoclin¥ ,"'"lIIuni.y. AI I)", ....,., "'"ie Ie",). tk ,h"a'ont<l scquesl~' con. inlO doubl In.: 

."nll.btli.y o{ {lItu .. COO,""" .waN! .IIKi "t;"ncics' ~bilily IV "".ro!.., "ption$ or i"ue , .. k nol." 

ul\d/:. "i llill& COll"""'" 1;"<:,, al Ihis 1m. "'"I:". lho", i. no cleII' palh r",wanl. Conlt"..c:lCm IIt'C 

tIcIlli,,& with "'any Wlkna ..... blo busi ..... and I.~ ri.b, i""lwi"1I1"e ~""'t io" of I",,,,, hoot 10 

IIW"hliC t<lmpiiancc " 'ith !he WAIt/'I Act. Many f..c:lCxt hit". OOfl,bint<! '" "",a1<: this 

",,",lainly. ;ncludi", the requimtlC1llll of the llm:atencd ~ itoclf. and tho btck (11 

..:tiooabl.lkIailu '" bow rockr1llaac"d.,. intrnd ,,, implement the 1I<q\OOSler. 

'I" ....... ~k:. N." Yor\;', _ ... ,.... .... "'doyIotI ........... _io 101M<in:_"""" ...... Cahr"n ... • ..... "'" 

"'I' .... o.Ivanco notic •• r. IMU loyotT Ir ~ atr«u '0 <mployHl .. f*1k:," ..... ~;y< oF ............. oF 

.mplo)'«. wor\;;oJ" tho r.";li,y. $_ wl'" 0011>0 ........ Qr .. _..., otI...,.~ ......... t..".fi, <001\""""",,, 

'"'I' .......... ...,iIKIo: Califonti .. ~""'- lI ...... i. 1II1~ K_ ~_. 1.4 '_ 00\0, Now Jonoy. 1'cno»'1 ....... T_-.d ..... ~. 

, 
32 

A'III< Commin .. i, wen ow,''', Ihe ... que .. cr ",a. enacled as part oflOO Budget Conn,,1 

ACI of2011 (,'BCA M).' In .xcMn~.., for apprn,;ni an im .. "", in llIe U ,S. "ebt cci1in~.the BCA 

,,",lldmed lhat Con&", .. enact I.lli.laliun Ih.l would .. hicvc SI.2 lIiJlion in 10101 budgetary 

,""inll' b~ li"KI ycar p'Y") 2021. If "'0 such legillation were cna.:t<:d by IXrtain deadli~5, 

lhen SU lri ll iun in ,ulomalic cuts. cq .... lly d;vi<lcd between <lden'" >lnd Modef"n.., budgetary 

"'l"~ori"", "v"ld begi" "" J."uary 2. 2013. A. enacted .. !!d" III< DCA. lItese COl,", i .• " lhl: 

><eql"""er, would "",ul! in anrlual fcJC1'lII 'P<1!<1 ing reduC1ions of roughly $109 billi!)n IltroU!;h 

FY202L The American T",pay~r llo1icf ACI of 2012 delayed thl: 5O<j1lC"Ior by muKJ>ly two 

"'<lIIlM. with III<", CUI. oow scheduled 10 bo~;n on March 1. unl= ConS"' .. further dd.y5 1hc 

df.eli", d.le o. passe-< ." oJI.",,,i,,, defrcit R<Jucti<m package bor"", ,h .• ttim".' 

A.< thins< now .tand. 111< greatest risk 10 COntta<:tors come Mareh I inVQlv", ""w contracLS thaI h.vc 1101 )'I:t been awarded. options thlll M"O 1\01 yot been ." .. d5ed. nnd t.,K 

0'&" IMI ha", not yO! been isoue<l. Thi. i, bee." .... for each of th."" conlrnct ",hide". Ihe 

rill"" would not )'ot I><: obli);"lCd when the OO<J,"""cr bogi"., A. ""'I"""",,,inn i. implcme,,1<:d 

.nd a[;o"cics' (,,!!din e levels "'0 ~~, many .~.""i.' 'imply will "'" h.ve .u!lidenl fund. 1<> 

flllly rund all of lho jlTUjocl., pru~n ..... ,'" ""Ii.itie. ~"I wen: anticipated at lbe it." of 

20n. Con""lucntly. the thn:~t of .adkal dc·{w>ding and. associ31cd job 10$. i$ gteiOlC$l to 

lhose p<rsunnd "I", ""t undor a conlf"", tMI i •• ubjCC1 10 ,enewol. ,c--1'.ward. opti<on ."orei",. or 

IOSK ,,,d ... i •• u."", aft ... Man:h 1.2013. 

Thi. i, 001 10 ,u~eSl. how.ver. thaI conl"",1 v"hick. i",,<I«l bel"", M •• d, I. oro 

""" .... ril y lOre from tl>o .fleet. of ocq"""" .. tinn. A, R ",.,hni",,1 ic!!,,1 ",OU,-",. 11>0 cllmnt 

guilL,,,,,,, within lhe 1",,",",i,,,, n",nch 00... no! indical. tital agende. would be legally nqulrtd 

10 t.m,in.te Of "' ro3<li~dy ..dju.1 ,,,i.ting com""t".1 ootH",itm",," in order to mtet Ihe 

n:d""od furMling level. thai wou ld bo impOSed under scqucitrillion,' Out as a practical matler. 

>I;«l<i •• may f,,!<1 ;1 ''''CC"'''''Y ur .d,"nl.~oo", to do to. For in,toneo, by tcrmitullinc for 

conveni.""e iu Inw priorily cnntmcl. MW,.n lIgetoCy wOllld I><: oble 10 de-<obligate \he ""spent 

FY200 funJ~ frum lhose """true". '11", agcl"'Y cou ld Ih"n "Vply tho"" dc-<oblil:"lod fund, 

lowatd Ihe l\'IIucti,"1 IRl'&Cts thaI 11>0 >q:.ncy mu.,1 meet urMler scqucstmtion. Allcm.l1i",ly, if 

such l\'IIuctioll" have n:ady~" .ppli"" and if 11>0 agency'. oolk ~ Of\' already runJling .t • 

rtduccd Ie",,!. il COIlld apply lhos<: dc-oblil:"icd f"nd, to othtr-. higher priQrity FY2013 conttacl 

action, for which sufficient funding is oillerv.isc una"ailable. 

Wh;I~ tl"'''' tWO ""onat;o< oJ>ow thAI diITc"'nt IYI"" of con!n1c:t acli"", bold ,·n.ying 

dcl!""'" ~f ,i.1. Ma.ly all li1ely =n:triO!l at. subject to "oru;idombl. ambiguilia 

U" foflunaldy, no,,~ of Ih<: likely t"",Henn option • ..,.1ll to in"oll'c disclo,ure of tin: con"",t. 

f""ls ncccssory for conlracl, to make "n inr,,,m.,j deci.ion as 10 (h;:ir WARN obligalion., Fur 

in,wl""'. we aru uwan: tholthc Mililary l><:p ... l",<:n". uJ'On 11>0 dire<lion oflh. Depuly s..'Cretary 

or .r~n"' . a", ,u""ntly pr<:paring plan. to :odd", .. ti>c budgel """",uin(i", I'fr'td by lhe 

, ¥,I., II. ·" t lIIl, 11) SI>l. 240 (Nt I ~ 

'P,L. tt2·240 1901, t26S ... 2JI) (210)), 

's.. ~Iy .. ,MO<Ot>doom {KIm Offi« of M~'.t Budt<' D<puty 01="" (or M..,_", J.oITr<)' 

~i<n"'. Sobj<>cl' "t ........ for UllUtI.Oin!)l ,,·ilh R<lp'" '" Fi",,1 Yoar ,0131lu4....,. Re.ou .... (I .. , 1~.1(t I)~ 

M"',()rl,,~'" I'iotIItloJluty S«"""l' ~r l:.or""" A<ltIOO e ...... SUIljecl: lI4iWllinl llildgelll}' UlICfNinly in FJ.a1 

Y_2\tll (J ... lO, ;IO IJ)(k<ro"'lI..-. -c..ct .. ,,,,,,"). 

, 
33 

lIm.tened .eq""'t~r and Ihe pending "<piMi"" or lhe "Y 13 Con'inuing Appropriations Act.' 

[Ju, eve" It.e.e pl.", - likely '0 be ,he m",' dotailed """I"",,,,,,,;on implc"",ntation plans n:1«1S<:<! 

I<> da'e .re unli'ely 10 iden,ify panicul..- c"n"""!.>. "pt;on" task olde .... or otlter ""nlroc' 

vehide. lhol tl .. Military Dcpan"t<"t' may t<:m,inalc Or cl«1 nOI 10 proc«d upon if 

seq"«I""i"" " .. re ,0 ""cU'. To be i Urc. ,he", plan. an: likely '" CX3Ccmate the nnxiety I<;\'el in 

""'''Y """"'" of ,he ''''n''''''''O, ""mnlunity, hy ""nfirming Ihe g<nernl sen,.., thaI signifiean' cu .. 

"'" f"""""ming and th.t the spec'"' of n c",uracling agency. tem';""tio" 1'0' eonveni""". i, 

Ioo,ning 1"'1:'" th." before. Hut wi1!\Out m<>r<: del. i, . il is <Iou"'[ul that any conlraclor can 

eumnlly predict with any d~)lNC of ..mainly I"" .pecilie impacLt; of >/:qu<S1""lioo, "" ill 

bo,,,jl1< .... in<ludinS the ,,,,,,,ific q" • .,io", of which ooni""'I"" , <on' ''''''' (and al ",hich 

10000Iion<) ore likely 10 be affected 01. levd thol "'ould Irill8" WARN noli"",. 

The nexl s«tion of Ihis testimony SUmmo,ius "",nc of the 'pecifie i""". 'hilI f«l=1 

COn,,".torI "in hove to oddr ... in Itying 10 minimizi~i both bu,;""', and kg,l ri.k. 

The follo"ing di""uso;o" uf 'JW.'Cilio iss"" •• b<,uld be untkr'lto<>d in e""tex,- In oddil;"" 

tn prolecling 'hei, bt"i"" .. ,;n' """,~' and m'''''iinlliell"l risk. t'C$f\Onsible oo"'pani"" "'lIllllu do 

Iho righl ,hinll by Ihoi' empluyee,. Apart f"'''' li,i&alion e,posu",. lite current u"""nainli"" 

!=><n' ""i"'J<cmployoc ,tlentiott .,Id ttlOfll l" issu« rot beth oonlfacl<>rS .nd tmplo)'cu. 

The WARN Ael prest"", ""vera! dillie"11 iii,,,,,. r", many fodcra! conlr.1Ot(or> f""i"8 

~"""'.l Oll, ""me o[whieh ore JIl n,mori7-ed OOlow. 

WARN's oolifiealio" provi,ion i. lri!ll!~tl'<I if. within any 9(hl.y pcriud, tl.,,,, .re 

"employmcmlu .... , I", 2 0< mure groups 01 . lin~le lile of employment. t."n of .. bieh i. I.", 

Ihan the [rcquilitej minimum number of employ""" .. bUI which in Ihe oggreg.'e e'ec ...,) lho, 

minimum nmni>t.·'. .. 29 U.S,C. § 2102(d). Thi, provision doc, nol .'pliei,ly add,,,,, ",'bethe, 

<me employmen' tao., ,h.,." .ufficienl 'o ,ri""" WARN', "",;lie"lion "",vi,ion i. "Ii-i"'1I.tcd 

"ilh ant.>lhc-r \''TllploYl1ocll,lu"" ,ho, is insufficient ly 1"'lI0 '0 triSl;Cf 'h" ,,,,,illeotion obligalion. 

Aggregalion con often he" tricky prohlem fo, employ .... thai have WMlorgOtl. a <erie, of 

I.yoff, and olher ""tkfOICt ' ""lruclurinll c, .. mlll. IJOL .--.~ ul.l iuru: "'qui", ~\t: cmploy,:, 10 "look 

ahead and ""hi nJ" 30 .~ and 90 d.)· •. respectively, 10 del.""i"" whe,he,. ~.ri •.• ofworH"",,, 

reductions both tokon and planoed will "'''''h It>< O\in;,oum " ",,,bers f(o,. WARN notice. Se~ 20 

C.F.R. § 639.S(aX2). The prnctieal challcogc:s ~ by 'tying 10 "",h "" ""0""'.10 count of the 

.ff.e,cd employ"". durinK Ihe ,dn'lU" lime JW.-ri,xh a'" made .non- com~lex by stllIUIO.-y 

, .-;.:. eo....- "'omo>. '''f''' "Ill>oof;" ,n. ,,,,,,,,qt •• ,,,,.,.r ... _"'I ",pi,,,,.., .r ,,,,, FY'] c..,,"ui.; 

"~ .. ,",,. M ..... 10<).""" ",. >«11" of "I, '1<"';01- "pi,.,,,,, i, ","'v,,"," the '1"<""'" otidtHO<ol 'odoy.' .. !>ow _.0nIy" the 0"""" """~ ".vIronm.." 1$ .t'fM"'a ,mploy'" to""""'" 0IId o""",n """"'" tMOII, """icil"nll in 'he fe(lonl C(\tI~or «omn1unity. "k ","","""" '0 """"'" 'h" many .. Iuobl< ...,~ 100« II 

""'" ''"'' bu<l;dory _ .... "'" p<r«ivo on impcnd"",_ .. _my, 

, 
34 

pmhibi,i".,1 again .. wing ,1(1"l' ' 0 c~""" ,he slMU'e. WARN I><ovid"" ,ha, ,h., i, is the 

CII1plol""" borden '0 ohow 1M' . X ';"" nf""'"lie< .. <1"<1;on' (which would nOI be "<l~n:¥.I<~) 

tor1: ,he .es"h ofseponl1c and dlSlincl cause. and ,.<>1 on oU","1'I '" <y""" Ihe !101ie<: "'qui",n .. ",.. 

29 U.S.C. ~ 2102(d); 20 C.f.lI. i 63<,1.5(&). Sop/tillic&",d COII1JloI:IOrs will be: UM\iniq IlIe 

"Il£I"$"t'()n flIko< ",ill> <~' .. mo~. [n the absc-nce of ""y a:lditionol Huidonc:c from "11"1110<)' 

""""""'" '" Cunan:», c","n the I0(>OI toplIi .. icalld and ...... ,·mc.ning oompania: may face 

<OIISkkTobl< .....:eminly "" thi. fiOint. 

1. SlnCIt Sit, or r."ploy", .. , 

Wbt1hct employment IoJS<'S OCCU. ot • ·'.inHIe .i,. of employm<"Ot" may do'(rn,i,... 

whe,he. " pi""1 closin~ or layulT I. ""bj«' '0 WARN. .[lH: exc.d.., in,,,l,,,,d in maJdnllll>il 

deten";""tioll i. oncn """'pi",,. 

The 'NIIl ~si"2Ic .i'e nf empln)lll<1lf· i$ nul .II;oh,lm;l)" delh .. d. II call rdt1" 10 dille • • 

,,;nak: location or a iJ'IUI1 of «>I"'~_ local;"" •. 20 CPR § 691.1(i)(1)' v.'lIrtI>Or mullipk: 

klR'""" .......uIUlC • ~"nJl< "k:~ under WARN i. a IOUI l~ y of lhe ci~ .... ,~ 

CDrjJfflltrl /)lsi. C-Uo{N~ Qrl~ &- V"",u.iJy ~ 1)//larJ INpI ,'iltwU. Inc.. IS F. 3d. 1275. 

1219(S1hCi •. I9'M). 

Ail • fl'1"It1'l'I rule. ~phlcally ",laIC"" ~ili ;'" "'" ... ;~( o.ilCS of cmpl<»"nwn':· 

whe", .. IlC01;",ph;""lly SCPl'ralC !beili'i.,. "'e !IeJ»""( ";1c1 rOl" 1""1"'K" of WARN. Rijlit •• 

. 1{dJ.mllrI/IJ<JUJllaJ Corp .. 78 I'. 3d 1277, 12110 (K~ ' Ci •. 19(16); Itt (J/$() F"..,I,., v ""'f"'X 

Corp .• 61 F. 3d 757. 766 (lOth Ci •. 11195) ~pro<imi,y ar,d eantigu ily an: ,be "",.t i",,,,,,,.,,, 

<died. ru. ma inlllin~l •• i,. ""'mnina,ions'"). ~'c f..,i1i'i"" I"""wl in diff.",n, sonlCS 

hundl«ll nf miks ap.u1 can1l()l tw. oon,idc.-n."" 0 - "ngl •• ile 0( cmplo~mcnt" fur WAKN 

ptIf))Oi/:J. Wil/id",.~. rhil/lps /'nrt>l~~", Co .. 23 FJd 9)0. 914 (S'h Ci •. 1994). Similarly. 

Innch otrlCCl of ... employer in ditr~n."OllocaJcs in. "'''I:;Ic ... ", "'" not. ~sin8k silO" <.Ieopi", 

,he maln otr"",·s """, .. Ii7C<! oonlnll 0""," 1bcir op<11ltiono. SH !foft;,.. ~I><>-II n.."gI ... 

CtJ,p .. . ........ , 7& I'. J.d at 12$0. tike .... ; .. , 1IOlI(0001i$OOUllitCS In ,he _ ge<>gnlflhilo IImIIlI100 

du 001 ........ the sa",. 11.Iff ot .",.....ionol JII'fPOX do not OOIUlitu,c • oinp,k: .. 1e. 20 CflC 

§ 6J9.3(i)(4). E""" « n'.-.Ii""" p1Iyroll and «nain ather <:<t1'm!im! ~ """ J'I'1WOI"I<I 

fun<I'u". lypital1y do BOt .., ... bll ,~ !Ie['O'1IIo, """"on,;",.""" kl<Mtiu,,,, ... "'i"llie o.ilO.~ SH 

InI"""/lOI,,,1 U~1on. Unl,.d J./1II<1 W"'''''f Y. Jim W.,I,cr !I~suu'",. 1,.. .. 6 F • .l<l 722. n .... n6 

(lllh Cit. 1993). 

Gruups of SIn"""",. tha, form. """'1"" '" indus";.1 1"'fIt. Or J<parau: (..,il i,iu acm" 

'M 511ft' from on< ",oothc:r. "'-Y be co<uidemi " ,inllc lite of .... pIoymtnl. 20 Cf ll 

t6l<,l . .I{i)(l). On 1hc oilier 1wId. COIIt;,,,,,,," buildi"!l-" ......... 'Il by the •• "' ..... pIoyer thai ha~ 

K~ 1lI3IIa&CI\"K1l1. prod_ diffcn:nl poodu<n, and ha~ !IrparalC wor1<fon:cs 11lII\0I''''''' 

..,.....,cmp!oymenl .. te<.. 20 O"R § 6l9.l(i)(S). 

c... I.", oold.l ..... IWI) (..,ili!'" need not be oonlii"",,10 be I ~singl< o.ite ~ for WARN 

J>IIfll'O"CS. Fur tlOl1COll'i& ....... ,,; 'cs 10 eo<wi,ul<: a ... inaJo si"'.~ lhe", mil>l be tom( COMIXIion 

be1 .... ..,.,. tho "'p:ll1I,e .it .. beyun<J ,hat ut C"'''''''''' o ....... "..,i". Rlj/t:ln v. U(Donnrll Dowglru 

C"'1I .. sup,u. 78 F. :k! ., )~80. In .""h ctiu. '0 COO$Iit u, • •• inSI. employ, ... ", $11., ,be 

, 
35 

IIOjNnllo r""illlies~, (I) be in "" ........ ble ~i< proximi'Y. ~ (2) he "used (Of,he ~ 

~;~ andO)~ tho .... SIa«and ~"; ....... nt~ 

AS wid! MOSl muiti-fac:1OI' IHlS. """Iuantion ... ill r<me many (ro..aJ COn"..ton to 

ItNgIc ... ith !he IfII'Ii<Miod of tho ,;",100 "Ie T\I~ I\n i~ _on! of Ibis I~ 

pmmixs 10 he expetl'!ive.. 

3. I'gy in liou ,,( No,i .. 

FOf a 'mOly of "'''''''''. emplO)'CfJ may""""",, 10 forego the 6O-<Ioy OOIiee ""IUi''''''''nl 

of WAItN in f.,TII' of a fairly "'rid. if 001 immoJiale. layolf of alf,"'t..<1 empjo)'I'CL In .IKh 

cln:ulll""""", wl.::", IUl clllplo~r l'I'yl lhe . 1T<;<;1<d ,"",ployo<:. for II>< 6O-<Ioy ""ri ..... il ""n 

,ubst."li.lly redue<: iI' polcntial expoJIII'I.' In lilill"lion. "I'll;' il box"".., IIIe ,mUle provi",," dUll 

any ",noun! of back pay owed 10 cmployeeJ bee."",,, of. f,i 1= '0 pmvi(\(' Mlioc: i. olT .. I by 

-B" "" .. Iary fJ'l)m<n{, made durina IU' period. Idle.! 

SopkiJtkaled """""'<len. ....Jcntand rhol ,hi • .enole!:), i. "", wi'hoU1 ri ~. Op. .. 

qox:SIionJ """"'" as '0 how poy MMl hendiu mllSl be ~cul;a!ed in unlc< \0 """>ply .. lth thiI 

""'''' ....... and wh':lll<r !he ","Y row ro''CI' 60 "",I<:n<la.- d...y$ 0.- wort day.. .~. '.fl.. Gt1Qo' •• W"', DWwy Co .. Civil No. CCR.10-1OOO. 2011 wt. 2115059 (D. Md. May 27. 201 1) (dcnyinc 

lI .. ftndanu· mocion 10 di .... in WAR.~ -'<:1 """,pIoi",. _i"l\ _ plli",if& had rnoadoc • 

pl .... lblc claim \hal tho .....ooam of 1'I'OIIq' poid 10 lhcm d~", 60 <1:0)'$ of -.!mioHSI .. ,ivc Ieo_ 

"'as illJ\lfficio:n1 11$ not ba$cd on tho: ~"""c·whuIt roonpenWOf)' provi,ion< of WAR:-I. which 

requires 11M: highoer of. I~yar 1venll' 0I'!he f,na) ",~ul .. M~. :!9 U.S.C. I 2104(.)(I)(A); 

coon ",led lhai di>e<M:f)' ..... ~ 10 dc1<flni"" ... ·btthor II>< &11<,<>11 reduo;llOI! in ","Y • 

• "",billed with II>< olf>C! of ..... e~~. may Il10 .... amouo~ 10 • tOIIS\f\ICli"" "'"ninol;"" 

In!:l:<'rinw lhe compcm.olOry proviilotu orlhe Ael). 

'1", dilemma for ",.oy ooolrx,Orll focinlj oeqUCSl/'aliml i. i11""II1I.,<>II b~ II>< WAItN 

lilig.lion resulting from lhe 1991 d<.:iiloo uru.: lXfcnse Dcpal'lnICni lO can«1 tho A·12 flljhtcr 

OOonoo.- pro<u""""", on ~dJ1''''''ly ~ rooticc. Su L«hrtr v . • ~IrD<!~"f/J DoUXIM CQtP.. 98 

F.ld 1056 (Slit Ci,. 1996). llw: (OCI. ur,he di.".~e"", "'IM1h n:1elling. 

McDoolno:lll)oucJu. alOfli .... tlh 0.-..1 Oynam~ m,=d into romnocu with tho U.s 

""VY in I?SS 10 cn&il'ftr and doveklp .... A·12 Ii!;htcr bumbt,. The COIWnoc1OQ experienced 

difficulty in C<>InI'kIi"ll tbe proj«! on lime and ... ·i!hin 1>uodetl. Au raul!. reblionshi~ willt tho: 

N • ...,. dotcritor2lro. In nrly December 1990 .• 11"'-':111"""" oVlni!;h1 bwrd ido",ifOf'd pOblfm> 

"';Ih !he dcsilO" ,,( lhoc: A·12. McDoolno:II OwIJlu .... _,lied on I)ccnnbt;.. 17. 1990 thaI iu 

""rfornw>cc was ~\lftS'lIilfaclOl')'" and tIw. l1l1I.,. it "",I cerwn JI)Cclfocd condi,iono by JItIU8I)' 

2. 1991. "ilio Go"""""",,, .... y ,,,,,,,i1l.'Ie r<>r def. ulC In rnpooIK. Md.k>nnell Owl/las. "" 

r>ectmbe120. i..ucd ~adv -r ""'~" 1U <:mplu)"Q """plaimn; ,ha, Ihc A-12 P"'\I'\IW 

,..,.. in oIu!'I:""~ On l>eccmw 21. Mcl)oo,ncll IJoo,,&lu 'lOIir .... 3jlplUXimatcly 2.S00 empk.>,,,,,, 

lholl"'-')' ...-ould I"",, I""r jnb. .oo..IJ U," A·12 project bo: lermina1ed. 

, 
36 

On January 2. MeDon"oll [>OU~I ... ubmi".d H wrinen ""'pon.., 10 (he Novy', 

Dcctn.ber 17 def.,,1t I\Otioe, . rcuinl:. i",", ~/w. . thal ,nany oflir<: probl~''''' idcnlifled with I.hc 

pro!:",,,, had beo:n «~rW. n .. 1 s;srne Jay. Md)om,cli L>ougJ .. 11><.1 wilh r<prcscnl.ti,,,,,, oflhe 

Navy .,>Ii oIT",,:<I. prol"'sal for eonlinLllllion Mtlre p,oject. Afkr ,his m«1ing.l~ l"a"y 1I""e 

McJ)onntll J)ouilas a Memor.ndum of Vndcl$llrndinll ("MOV") OC1tinll forth tire term. "n<\ef 

wl,ich the N.vy ,,'. s willing 10 c""tin~ wjrh rhe (II'Oj..,r, and infom,<'([ !he company tlrat 11>0 

Na\')' had "'TIl> intent 10 lronillllt • . " o.,spile Ih.,.,. posilive developments, ,,,,= N.vy Icrminat«llhe 

""n'noeI liYe da~" lalcr, on Janual)' 7, 1991. Aboul. "'eek th ... an.r, Molkrnndllkru&las i<sue..l 

formal no,ice 10 hundreds of an«tod employ",", that .l1<ir ';mptoymcnt would tenuilllto ., the 

~"J ur II>" 1II0n,lI. 

Litigation inevitably ensued. Th. case "'en1 allt~ way 10. tri.1 RI which lhe CQrnpllny 

prevailed. Affinnillj; lhe dttisionofthc triol CQUn, lhe Eighth Cirellit hold tho, the unf=-ablo 

bu.i"" ... cireum>t.ncc exception 10 W,\RN', 6O-<I.y nolice requir.r ..... t .,.US<:<.i Mco.,nocll 

IKrugJas' f.ilure '0 profTer n limely noti« of the m:u$ 1.)'OfT •. Id . • t 1061-62. Tire .<>urI 

c~pl.ined tM' .11OO,,&!, MclKrn ",,1I D""IIIa.' h.d "",icc of lhe prceari""" ""'un: of Ilrc <onl"",t 

101lj; ~for~ it W,," ,.rmina!cd, Ih~ N~,'y'. C"'H."II~lio" ~"." ,1<11 reasonably fores«ablc," 1<1 al 

1062. The roml n:a..,ned 1.3t due '0 lbe "UniQU<), I"'li,kally durged" froid "f <!ef."", 

""n''''''tinK, wid Ih< fo.ct ,iral th" ~ovcmmc". "'rely cancel. 8 «Inll.""t fur. PMf:",m for ,,1rleh;t 

Ita. e:tl""-"""<l a ""M. il w:l, ""-"",,able for McDon1>C1I Douglas 10 delay issuing WARN nolice. 

"nlil lhe c"ntnrcl Wll< .clwtlly I"n"illaled 011 J""" .. y 7. Ane, "'lIIn.ri ~ing '00 evidenc<, the 

courl ""neluded loot il had Ml i'tle difficullY in cOl>Chtdin ~ tilal the O<,,'emm.nt". bn .... y 7 

""'KlWlCemenl wa. sudden. drumati, arid ",,,,,,,,,,,1,..1." /d. 

The I."drr~r '"uri al'" rejcc\cd 1,loinliffs' addilional al'iume nllhat MoDonnell DouglM 

.OO"ld Ir.\,,, i .. "ed an e .... lier, co,ldilion.1 nolle •. After observi nll rhal an <mplo)":l' ""wid in 

011)<1 .ilo"'i",,. '0< "",1I·ad"i~ .0 "n<krt.~~ notir,~8tiorr in "rd" to fend ofT tho pm,pee' of 

li.hility ," the • ..,un found no \·iol.t;"" on Ihi. theory. The courl explained Ih:i, bcc:tusc tho 

"dc'Cisi,," "h<:lher t" !live ""rldili"".I'Kltice i. committed to on employe,'s di5Cre1ion," ""en if it 

had """n "PP"'I'tialc fOf McDonneil IKr"&las ta iss...., such nolioe. fa ilUll' '0 do 51> """"no~ in 

ir.sclf. j""lify lh. imposilion "fWARN liabililY," hi· 

(1<:"",...1 Il)'"",,,i,,, ,ook . difT"ronl approach 10 lhe cri. i •. I, i.sucd a communication 10 

its .fTecled employ«s OIl December 20. This eommunie31ion was speoiJicaJly described Q R 

"",,,jilio, .. 1 WARN nolic". Go"" .. 1 [»)'rWt.ie. gO! ,u«I &IIyway, in . WARN I."~;t hroll8~t by 

the bhM "ni"" ~e""'tin~. <uM,"ntiru number of Ihe individurus ..... ho ........ ultimllely laid oil: 

Lik" Mc[).m1lC1l Douglas, liral OOIllPIIJlY had to go .11 Ihe way 10 tri. 1 before it ultima,"l), 

prevailed, afler lhe dimicI court d~nied it. molion fnr . umm'")' judgm<nl un Ih<: i"""" of 

n:as<H,,'blc for>;>eeabilily. FolI"wing a 'o<nch trial, the disl,i"1 cuurt in Ihat case held far the 

oonlraclOf, holding th:ttlhe December 20 communication ,onstitoted. v.lid """ndi,ion.1 notice" 

• Whilt.lh< iHuanu of < .. lIitionol ootiu;, rliocm>on.ry, " WMtI ~lIy ___ <II , i,i., ",.ice """'. pbnr 

<!Mi" iI Mltieipol«! ... ,n if",. _ice;' "'" .rridly f<quirtd, IIoth WARIli ...:I its i .. p~;", "1:"bti"", ••• " rlw .., ,mpl<»i<r ... "";'"", ""luir<d 10 eornply ... ith ""ARN', nolie. "","WcM«\l ''''''''!d. to Iho ""., po>:Iib". 

pm""'" Il0l;'''' lO<onp\cy<d .1>0<" " I""P""'I 10 "" ... pl,r" '" p<tm- '11 ",du<e" """,ror...'" l«<lIl1~'" 

,!Jo IIfI 'I/!M. 'IT-"." •. ):1(: f"' ...... 1""-. No. 94 C }Wi. tWlll.S. Di,,- LEXIS J941 .• '26-27 (N.O. III .. M .. 1'1. '~j(qOOI" :/'H C. .~ 1{)6,20C F.R.16J9,1 ')~ 

, 
37 

thai complied ,",'ith WAKN. InI_i<HoaI A ... ·~ of M""hims4 v. tJe-~'1 0)._1<".1 CiYp, ~21 

I'SUP!'. 1l06, 1310 (lW. Mo. 1993). 

So Cenditioul " .. ti« 

TIx: A·12 ""p ill,,"","," Ih;oI whriIoor to ....., .,.,..,.titionll "",itt ..,.y be the ""'"' 

chalknlli"~ dec;';"" (ac:intI fcdcno1 wnt,.,..", thi. motIth. 001. .<gUIatiofts pn.>vi~ "'"'" 

KUid:o.oo; as to the circulI\l\lInO<'S in ...... i.h conditiun:ol "",ice ur an """"""III .mployment .... 

!NY uti,fy . compat>y', WARN ublipl"""'. Tlw:applicable regulation,st;lt.: 

N<>Iice ..,.y be ''''(11 «)IIditi"",,1 u""" the ocell,.,...""" QI" 

"""""",urrmco of an ovont, s ... h ... the "" .. wal of. major COIllracl. 

only "I .. " Ihe c,·.m " defi nite a"d the conscq..:rn:es of iu 

"""u"""". or JIoOOOCculT<<lCC will 'I<:~ssarily. in tnc.1>(K"Ilta1 cOlI ..... 

ufbus;n"u, 1 .... <1 to. ern'o",d plo"t do,ing or mil .. lorBITI"", thin 

60 days .Ikr the .""nt. 

2(1 C,f.R.. § 639,7(aX3). 

C~ 01'1 the finol till( impk-n\<ntinl WARN, issu<d by the lkpmJ"",,1 .. rUbor, 

bnplo>ymctll and Tnoining AdmIJliSU'Miun, pro-;idco "'"'" additional pidanoo rcpdil1ll 

conditi<xlal noti= TIx: (ull .... '''£ hypulhetical involves a utility Ih:lt optraIC1. D""" PO""" 

pIonl that i. the subjca of"""'" .....,.,..,Iinn: 

A rcf".,."ooum i. ""btxlulC'll 10 tole pi..., 10 d""i~ wIIeIhe. the 

utility should rontlnue to ."..,.t. the plant rf the vUl ... decide 

that tlIc plant should be cloooed. the utirity may"""" to beain 

lCmtinlOting wolken fai.ly quickly "II .. tN, refrrendum <><>.:urs. In 

th.esc circum)t.""""' rf • .,hod"l. of layoff. tan be dcte,n,iO>ed 60 

day. in 00''''''''. " f the fi,," ~)'<> rr. ,oodilioll,1 ooli« ""'1 be 

odvi .. bl •• 

Wori.C"f Adjustm,.,,1 and Rell"llininc NotmCllti"". S4 I'K 16042{April 20. 1919). 

Tho: ""mtrlCllWy r""her 'lOlI"S that "oono;Ii!KJtur.l ooti..., is ~ilt<:d ""') if IItnvt I, a 

tkfi~iI~ ." ... ,. li~e the ",newar of a....;or wntract, tI>o ccnocq"""""" OrlM occ""""'" or non· 

O«~ of wllicb will ddinitdy lead to • covered plant elosi", "" ""'"' layolT less lhan 60 

da)'ll aflrt the O'WtIL" Id ( ..... pftaJl' lidded). Sumo: or lhooc who conullcnle<t 011 the I\Ik '"nu:d 

""""""" thfIl. condi,;., ... 1 "",ice n>qt>i~ ro" ld lead 10 ·tollina· or o,"ctbrutod nu!i<;., "'" to 

I;"bilily r ... employ"", .. '110 r>l11O Ki • .., condili"".J ,,,,,100." IrL 

~ cue law """r.~ thol. in..nlcr 10 be err"",i •• ,. candilional _i~c ttI~llklCnbc:. 

I",,,,,, ""finlle "".111. &e ... , .. N.w 1:",1,,,,,, lI.ulrh C""~ £",ploy< .. U.,;."'. ~t.lI 1/"", N~"lnlllfam •. Inc. No. CV·%-12216-I'liS, I\l'JII U.S. l)i01, 1.F.Xrs 12117. at '21).2 1 (S.D. 

M ..... July 30. 19')g) (itle WAKN .. n.'&~I~\ion' pt:nnilr"ndili"",,1 noti", who", the """",rcn<:c 

or oon«CUtKn« orrome ruwn.' ~'~"I , wh ich I. ""rt.;n 10 """"pi.c. will """",ssarily leild wilh,. 

,ixly days 10 I plAn1 closing OJ mll.\<lnyotr"). 

, 
38 

In oddil;"'n lu the 1",.';ticall>roblomJ with identifying. fUlure delinil" evenl, lhe A·12 

lil;&"lioo illu$1l'''1<:' I\<Jw. conl"",lur Can be <OC011d· gllMSC<l ~.Io ;1. decision ofwh"n '" ;"'YO II 

COOO;I;O""\ MIke. 

Tho compkxil ;~< M<QC;n1e<l wi." a cnooiliooat ""'ice stra1CiY are illumau,d by I'%rniv 

esc Applied Tee""" No. 1,\0"",v·J26, 2010 WL 5401406 (S.D. Ollio. Dec. 23. 2010). Th~ 

emploJ'Cr ;n 1,,,land hel d . tonlra<1 willi lhe tJniled SIal •• Poslol Service ("USPS·l . which ""0$ 

due lu .~pire un JUJI.< 30. 2009. 10 ....... ioemail I"""'pon equipmenl. 1(/. al 'I, Ali., lhe USPS 

inf",,,,ed Ihe employ", 011 April 17.2009 IIw il had nol yel d.eided whelher 10 relit'" lhe 

cnnl""". ,he emplo)"~r. on April )0. i .. l>Od a wrillen not;ce 10 employees .ha •• heir ."'plo)""'"ol 

"",,uld ,,,,,,,inale d"" 10 lh. 8nlieipnlerl plOnl cI""inll' Id. .. '2, 11>0 e",plo)"<T ~xplairu:J lhal ~,i. 

aclion was I""'''s,s,,,y "due lu the 1'",,1 lhal 11"" USPS 1 has 1101 )"cl n ... de • fin.1 decision on lhe 

pmsible ro'>o",,1 oflhe "',,,Iroc, allhi. f""ilily. ",hich we mllSl.l llli. lim. concl..dc 10 mean Ihe 

p<rm:lIl~nl end "flhe """1,,,"1 .1 Ihi. raeilily." Id 

·Ibere.ner. llic empluyer ."gaged in ""goliali"" . .... ;1. ,he USI"S al>oul On <xlcn.;on of 

lhe coni""". "'hkh n""" .. ila1e<llh. emplo)"er I=i"ll new properl)" 10 c<>,,,h,,,r it. operalio",. hL 

"I .J. Afler 0&=i"8 10 • """,mel e,,,,,,,i,,,, ",ilh 1M USPS alld ..,curi"i a now facilily, 1M 

employer. on June 8. ; .. ued • "",i ... -<1 IlUli<." 10 ell\ploye ... e",plainins ~"" il .... ould besin 

p<rmallcllllayoIT •• ,;1S currellll""ati"n OIl June IS in \ighl "f!he wi""inil OOWli of o~"l\iun. at 

the currenl f.ciliry, hi, On June 18. lhe employer no1ilied emplo)"<xs a, ilS currcnllOCl'llion ,11.'1 

they had Ihe option 10 uansfe, 10 ,he ""w f""il iry, and th.1 II>os< .mployee .... ho cl>o.e lIOl 10 

lran,for ..... "uld be b id off on June )0. !d. 81 · 4. On Jun. 29, lhe employer Mtilicd oIl II>Mc 

"mplu)'"". ",ho opled 1101 10 ImIl.'lfcr ,0 the l1CW fociHly 'ho11 thoir emplo}'menl .... ," lennin3lt:<! 

due 10 a layoff.ffee1i'·. lhe IICXI day. June 30. {d. al '5. 

A iIJOUP of laid off cn>ployc""i n:sprn,tktl by flli"i" WARN Acl complaint "[be co"n 

&l"llled .u"unary ju<i&mCnl lu Ihe .,nploye, on plaimiff,' daim.,hat il fa iled 10 pro"ide pro ... , 

noIict undo, Ih< WARN ACI. n.. Coon held lhallhc <"'plu)"r'. noli"" Iu <'npiuy"" •• "'!lith 

"" ..,. coudilio".1 b«:aus<: USPS had 00, made a flnal oc.;,i.ion "" ro ... -he,her ro ... new i" 

""nlner.~ WM """n,i<1Cn1 wirh ,he WARN At]"s aulhoriZlllion ofcondilional nolic ... " !d "I·~ 

(.ilinC 20. C.F,II.. § 6)9.7(a)(3). lI.e}ecl;nll pi,inliffs' cloim ,h,l ,he M';ce w:u dend."" 1>0<.""" il d id nol '"clearly Slule IMllhe fu<ilily wool.! be ol""ing or lhal l.yum .....,'" likely," lhe !.:ourl 

c,pl,incd lMl the condilional not", ..... .,,, ""Iisfaclory because il apl"ised c"'~ o)'""s th.1 !he 

C1I1plo}'o' ""Quld 00 lun~o' be "bl~!u on'er [ll>onll """li"",,<1 "",,,luyu,e1l] wilh lhe COI11p'n~ 

"""~''''< il ,,,lIicipnteJ the ]>Oh""'C'" end of lhe [USPS] Mn''''''' . , ,hi. faciliry." Id at ·8 

(inlemol q""",lion omined). 

The dilemma facing n,""y c~nll'l\C'()t'< i. f,,"her comrlic",cd hy oIher challonge, in 

"""'plying wilh WARN "00 relOied 51.a !ul~ ', Addili"nal i",,,,,,, Ihal an: likely 10 CaUS<: headaches 

after"""" .. lmlio", include: 

0) Uncel1. inty os to lhe WARN IIcl implicalions of 'in·..,un;in~· <I«:i.i"". 

!hal ",ay be made t>y conl""'ling ~goncics, Suo e g .. V.'· mlu"" _, Ol"be 

A>'h"km S"curily Sen ... 4$4 F.3d 1043 (9lh Ci •. 2006)(00 WARN 

" 
39 

>lol8lion on ."edfIC facts showio!; lOOt workers "~,e 1.id "ff due 10 

fed.,..IIO"wnunont l""o~' ... 't). 

b) An,bi&uili", in WARN·, dennit;"" ofa ·'pl.nl c1o,ing·· in .iloali""" ... 1lI:", 

a few employe .. ",main an~, p<odO>Clion op<rmions on: e"",,eluded al • 

I'",tic"'''' facililY. 29 II.S.C. § 21 0 I (2). 

c) Simila' ambiKUil i"" wilh "'.\flOCI '0 lOe . ignif,,'anee "fa di.liJLel ""emlio" 

wiillin a particu l ... facili,y. S,,2. e.g.. Paw"" \ •. Jlrt,. .. ·n & Sharp< Mfg. Co .. 

1!44 1'.Supp. H<Xl (I).R.l. 1994)(><1'''1 tIow" of ']>CCilk pan. of • 

manufaclllrin~ depanmcnl found to Ill: a planl closin~ for WARN PUl"JX'Sel 

where the coun found lNoI lbe department had • d;'tinclivc product, 

opemlion and wmk function 01 a , ingle , ;1< or employn",nt): !lagwd/ >. 

r.""nlre" DlHws If Wil"/lIWS. Inc. . 2,08·CV·191·RWS-SSC, 2011 WI. 

1497K:1I (N.l). {ia. Fen. 8 201l)(di"' .... ion of tTt:ltmenl of .. ariou, 

o""l1ltin~ ",,;1. wililin a planl). 

d) As.=;nK • '·"" ely of ;,.""" '==ry to makc an ace"",le C<I"nl of 

arr<"<lcd employ"". indudi"~ rcsolv n~ questio". "r whether individual. 

hired as lempotat)' or leason.1 ""Orken. eenain part'lime "'"Orkers. or 

employc<"J hi~ lIS lemporary projecl wwl<~ .... mUll be counll'd in 

delermining whclh<:r I .... orkforc. reduction meets lhe WARN ihn:,hold .. 

&~. ' .1: .. 29 U.S.C. § 2103(1); 20 C.FK § 639 S(c); Ma'~~u. r,,/Iu 1I~11Ch. IlIc .• 867 F.SuW. 1438 (N.Il. C~1. 19()94X""n.;n agricuhur~1 

,\Uri,·" ""01lll:<! 1"""'01l01lt "".",,,,,1 ompluye ..... ont;II<:<I I" WARN 

oot ic. ~ Su 01.'0 EIIi.' >. DilL F.:qn.'.,· /loc:. (USA). 6ll f.ld 522 (7lh Cir. 

2011). roll' g dc"ied (Feb.~, 20ll), <wi. <k,,;~.1132 S. Ct. 102 (0<1. 3, 

1011) (addre. .. ,ing the i",,,,, of whel"'" individual. who CX .. ul<:t! 

sevenu,oo as","","nl, in connectiun with a prior w"rHo",c "",Irucluring 

,1Iould be d .. ",ed OS ~v<>l l1"ry'· &) .. ,1""," for P"rposes of d<1e'rninin& 

wh<:tltcr the WAR..\i Ihr<:shold. "'"'"'" mel in a ,ubseq ... ", la}·,,!\); C<>lIin, 

". Gee Wtst SiOille !.I.C. 631 F.3d 1001 ('JIh Ci,. 2011) (re>'CrlinS dinrict 

~ou" and holJin~ Ihat cmplQYecs who left tbdr j obs b«au~ b\lsi1ll'ss WllS 

do,ing slIffered on ·'employmenll"",'· for WARN). 

0) IA:lcllnilling whe" a ,100,[.10"" loyon· .IIlIIUllt. lu "" ··empluyment I"",· 

IMI lrisgC,", WARN OO1ifi •• ,inn <lbligntiOM. 1'""kul>Tly in the (p<."Ii!ap:I 

likdy) evelll Or" "'~"""I d,."ci,iu" by " <:<)"lrllCling "8<''''1 10 ",ston: 

fmtdin~ 10 a panicular Prot""" or conlrac!. WARN ienemlly provide< 

tMt noli •• i. 001 n."«ui",d in" caso ofa I.yofl"oflc-...thall six ,,,,,mh>. or. 

reduct;"" of hou,"" of Ie .. lhan 50% durin!; a .;~ month period. Set 29 

U.S.(;. § 2101(aX6). !iu /JI,,/soe >. Em.ry WQrltt .... ·ld. AI,/intl. 1M .. 635 

1'.3<1836 (6'h Cir. 2011). em denied. 132 S. Ct. 11~ (201IXdiscu"ion or 

vari"LIO <;<>mmuni""lion, i",ucd by .. ,npl"y .. '" '"ganJin~ the """""led 

d..,..,ion of a layoff caused by re&uI3u"y di'pule wilh ~·IIA). 

" 
40 

I) Aonbiguili ... aboul M'i,Fyinll ,1>0 employee Inmofor requi.ements of 

WAR!'>:, T1>c sta'u'< pro.iJ« ,hal an cnlplu)'co.roc. ,><>I c'pW'icncc"" 

·~""p lo,.",c"t I<>S.II· fo, purpose. of tlig~erinll WARN oblismion, in 

certain S;IU3liol\! in which u:lnsfc, OppOnunilieJ are orfel'C"d 10 afT(et,,'II 

"",ploy"." .. ~, ~.!l., MtII";" v. ,1MII S"N., Corp .. gn F,Surp. lOR 

(F..n.NY J995Xentployc"" tennin.too on June 4 and pla<e in n.w 

posiliu" w;lh aequi,iog ""mpu"y 'hrec day. 1.,,,, did 1101 s"ft~r nn 

mplo~1l1ent los,· for WARN purpooes). 

II. mploy<'" I~<'<n' ion amI O'h •• Employe< Monl. I .. "e. 

Cootl"ltCIOrs ~rt parti~ularty oonccmcd abou, how lile eu,,,,nt u...,.,nainty .... ill .ff""'li1ei, 

vtllued emplny""". En'ploy« ft'enl;""; '" critical go.' for mos, eml'lO)I= In"""'"- industry 

.. cto~ [<<len .. CO"tra<t"", .re ""moo abou' • ·brai" dr~;n~ "",,"ario, in wbicb .ig"ilka"t 

"un,ho", of ",i .. inn..,riti""l ernplnyee.s, •. g" enllinO<m, ""mpu'er rmfe .. inrurl", may rl""ide IC> 

"""'RC 0"'1'10)",,'" r~~"" ~"'" Ia.:c Iho pm'p<:e' of ",,.,ible layoff. 

The th,-.,., of""'l"""""i"n PQJ<'$ a dim",,,,, (bu' no Ie .. "'rious) SOl "r cmplo)'"" """"I" 

iss"". f~r individ .... 1$ who may not be ablo to find lUlO(lttr ioh ... q~icl;ly .. a highly (f"i""" 

",f\w.rc <I""il:" Ol\gir,..".. t'rodllCt;vity and monolo ."ffc, ..... be" employttl are oonctm<:d abo~1 

job $tturi,y. 'Ilu: .. cm><:<:ms will be e. "".rtal<'" by ,he likely ""eM';o of temporary fu,'ou~, 

and recoil •. sub!"", t" .he "agari." or tltt prOton-'men' proc<:" rollo .... 'ing (he "qU."Of. 

'W'II<.~Ite;. fooeNI conlrac,o,'s costs are dttrn<:d Hallnwoble: und may Ihus be JIOi~ by 

tho wnvern","nt, i, a hit:/tly fact-specific inquiry (h3( invulw. rtumc"'l1$ obj«1i,'. (e.g, rho 

:;pe<ific ,,,"s in q""otion. tho 'imin!! of lltc COSl', <"1c.) and .ubj""'i,'. OSSO""'"C"" (i.~., '''"., the cu," ",.",,,able), For ,hi. ,,'uon, tho:", i • ..., ddlltiti.c, H O!IC-.i"",·fi",·a11" .,"'" .. , '" tho 

que,,;on of ..... h.the'. in 'he woke or .K<juo .. ' otion . • oonuoc!or's CO;" of oomplyirlll willt tltt: 

WARN Ac'. or or dd"nding "I"in" alleged violations ur 'he WIIRN lIet, ..... ould ho Mcmoo 

allu,.-"blc by t!ll: rontnrc,ing II£cncy. Tha' ,..id, " CO"t""""'" cos," of complying "ith thc 

WARN IICI. or of, ... "" .. fully d<:f~rKlirrK i", oornpli_,\: with thc WI\RN IIct, .... "uld galll,ally 

be d«med an aHowablc co", for which lhe contrac'or may ..,.,k ""'''P<:''''''';UII from its 

M"'NIC,ing .~cney. r I'or PuI"Jl'O'C' "r ,hi, .. ,.Iy,i., tltrn: i, no me;m;nwfnl di" inction between 

,ueh CO"" ineunoo "-, a ,"",ult nf .... ".,"''''''''n.ioo''''oo conlract ""tio" ( •. g., tcnnin.tio~ r.,,-

convcnie,""" f.iluN (1.1 ""en·i.., "" "pti,,". tiC.) ""d "-os" ino:u""",:! '" • ",.ul, ofa ,imil., oont""" 

acli,," <>courrinG in the urdinary course of sovt,nll\On, ol" ""'iO<l'l. 

"The <jtICSlion< of ..... hethe. II p:micula, '-"<In'raolo~ . co'<l. will be deemed ".How.bl.· in the 

c",n' of"",,!oes'I'OI><II) i.,h"" likely '" hill~c on Iho ""rll", ctu,'s""mpllanc~ w;,h the WARN Ac', 

mIlle, t/uut I.In _ uniQUO appli¢ation of the eo!! prillCiplc$. The cenlral que"in" in I;'ill",o.,n will 

..., on ....... 'menl of when ,he CMlmClO' knew, with l um.,;c", .p<:dndt y, ,h.! soq ... stratiun. 

' t, . '\";'.1~. ' __ """HI likoly r<qU<'5I!hio <Omp<n"';'" from 1M I'"" """""" b)I...bo>inln,. 'I.;m ...... "... 0';0 "'om ............. _nt 1""1""-". 

" 
41 

Chairman WALBERG. Thank you. 

Mr. Eisenbrey, welcome. 

STATEMENT OF ROSS EISENBREY, VICE PRESIDENT, 

ECONOMIC POLICY INSTITUTE 

Mr. EISENBREY. Mr. Chairman—thank you Mr. Chairman. It is 

a pleasure to be here. As you know, I was the staffer to Congressman Bill Ford, who was the principle House author of the bill. I 

worked on the legislation for 9 years and helped negotiate the conference report with the Senate, and helped draft a couple of rounds 
42 

of comments that are in one of your committee prints, which I helpfully brought for you. And so I have a long history with this act. 

I have three main points today. One is that what the department 

did was completely appropriate. Giving guidance to employers is 

part of their responsibility. They have been doing it ever since the 

law passed, and that is totally appropriate. 

Number two, if federal contractors—you have heard there is really no doubt about this now. If contractors had given 60 days’ notice 

back in November because of the proposed sequester, it would have 

been counterproductive and needlessly disruptive. It would have 

done a lot of damage in fact to the contractors themselves and their 

communities. 

The issues—finally, the issues of the WARN Act and its potential 

for mass layoffs is only here before us because Congress hasn’t 

dealt with sequestration. And as Mr. Courtney said, that is the real 

problem. That is what has to be addressed. And we should be looking forward, I think it would be more helpful than looking back to 

what the department did or didn’t do. 

But, in any event, what the department did was appropriate. You 

know that on the department’s Web site is, as Ms. Oates said, is 

guidance that they have given in Katrina without any objection 

from anybody, guidance that they gave in 2003 when they put together the employer handbook for the WARN Act. 

It—on the one hand you can’t say that those, as my colleagues, 

my fellow panelists have said, that those things were appropriate 

and somehow this wasn’t. The department should give guidance. 

And they have been proven right. 

I mean, that is the other thing. They said this was speculative. 

It might not happen. In fact, it is less likely to happen than to happen on January 2nd. So, giving notice, even conditional notice 

would be inappropriate. The department was right. 

The law in this area has been dealt with in the submissions, but 

you know I think it is important to just read one thing from the 

A-12 cases that Mr. Gies mentioned. And that is that the court said 

this isn’t a case of a single contract cancellation. They said the 

question of reasonable foreseeability begs another question. 

By adopting the standard, does the WARN Act envision the probability of an unforeseen business circumstance, i.e. a contract cancellation, or instead the mere possibility of such a circumstance? 

We can only conclude that it is the probability of occurrence that 

makes a business circumstance reasonably foreseeable. 

That is in the case of a single cancellation. Here we are talking 

about sequestration that will lead to who knows how many cancellations. The Department of Defense in its letter on the subject 

says for contracts in place that are incrementally funded, any action to adjust funding levels would likely occur, if it occurred at all, 

several months after sequestration. 

This is a point that Mr. Courtney said. It is way too early for employers to be giving these notices. And I am very confident that 

courts would agree with my interpretation of the law. 

Finally, let us talk about sequestration. This is a disaster. The 

CBO, I think, has said that there would be three quarters of a million jobs lost if it went forward. At my institute the economists at 

the Economic Policy Institute have estimated that 660,000 jobs will 
43 

be lost just in 2013 if the sequestration were to take place on 

March 1st. 

That is the problem that Congress needs to be dealing with. It 

needs to be stopped. And I really encourage this committee and 

every committee to put their energy there. Thank you. 

[The statement of Mr. Eisenbrey follows:] 
44 

Thank Y"" fot '"'-,'mg me '0 'c>!ify about tho WARN Act, I was 100 legislali" . d,,,-",,wr 

fur tht.: bill', Ilou<;< am""r, ConsrCISnlatl Will"m D. I'urd ,,(Mkh'gan. and I workt:"<! 0" 

,he Ic&"btton (rom 1979 until it'I"l'''SC in 0<'0110, 19~9. I hdjX-.J ""sot'.'< the linal 

<onf"",,,,,. "'1"''' wilh st"ff of ,he Scnat< labor and Ilum." R~"'u ce. Comm'II«. """ 

hcll"-..J J",n "", rounds u( regulatory cormn",," subin,u<"\l by Rep",,,,n",'i,'. Ford. 

R.r~n1ali,·e Bill CI.y. RCi=",nla"w Jim Jeffords. and S<natot Hownnl M"'><:nba"m. 

I h3\'c tht"" po,nt<"'con,-cy too.)', 

I. The ~nl of I.abor', gui""",," leu« "" •• 'ppropriale Md ""rr"",')' ei>ara<tori=! lhe I.w and,u ""Iu;""""n'_, 

2. If fc<lcraJ """'melo .. had ~,,,,"n nol;"< 60 ""Y~ beforo Ihc e" p"'.t"d :«q .... t., <In 

J;rnuar}' 2, 20 13 il would haw beon rounlotprodUl:I,,,, . ,,. """dle-.sly di.rupti,'e, 

J_ The i_ ofpoten'ial m .... I.yon, and WARN guidanc. are only beforo us 

be<-~""" ConjVeSlIw be.n un:rbl. 10 undo ,I>c misguided $CGucstl1Uion il SCI up to 

-'PU' i:>udgo, ne¥I)!i.,io"s, Undoing KqllCStralion .hould be Con~ress', foou •. 

The auidan<e I."er xcu""ely sets out lho purpose:. ont! teq",remenl< of the ,','ute. In 

parlic"'"." ... "U/'"~tcly J~",ribe.'he ""'a 'ICe ,he WARN Ac' ." ..... k \>c,,,,,,," gene ... ' 

fIOI;.,.,. ,,~,ch CM ",,,,,,,im .. "" helpful. ond ,II<- 'jIC'<;f,c Mli,," "fj"h 10.< ' hOI CO\·.r«! 

"'"plo),,,rs musl gi"" <mplole.s UM« Ihe Act Repn''''ltt.ti,'. Funl an" the olher aUlhors 

~f tI,. bill were dctcnn;""d 10 1""'-""' unhe lpful bl,,,k<:1 Dr rolling ",,'ioe of Ih. Iype: !hal 

m;ghllil)': " I(the o<otIQ,ny<lonn', impro'-." ,,-. m'~1 h.,,, ,ud"", "'" (acIO,,'," Or. 

"W" m'&hl haw ,I> lay yoo ofT,,, 6Q d")-,, but "''' CM'I "'y it", more likely ,han 001." 

Rep, ford and hi, <ollo'iU<$"'" '''0 .. "ofcom"",n" infonning DOL os i, pnopan.-d 

,lie 'mpl.men,ing "'gula,i"", thot only ","cilic "",icc could sati.r}, , .... Acf. 

rNJui",mo",,_ Tho .. lene",,,." be: found in thi, commi"".,.. prin' of,he l"gtSlal" 'e 

~iSloryofWARN. S",bl No. IOI-K, publi"'"" r"bruary 6. 1990. 

The WAK/\ Act t, ,nlended '0 do ,lire< thinas: 

I. To got'" cmp"'y",,' oflats" .nd n>«!,u nl,S,"'<! ho';"" .... , .. '."" 6(1 da)--. ad,";)",,< 

M',,,,, of and 3J1 oppununity 10 PfC1I'I'" tb,'m""h'os ro,tho l'<IIcn"ally d ..... "ting 

in,!,,",' or corporale d,'Ci,ion. '0 .nlll dOli n • f",,;I,ly ". 10 I.y off itlb;l.mial 

"um""" of w<ltkcrs. It ~'-cs "m"rs " ,,1I;roc<: '" P"'P"'" ,hei, ioo',·iduallinar.:cs f<lta sbock and to ~gin .. =hin~ fo' RCwcmplo)·menl. \\;,h "t\OU~h I<ad lim. 10 

m;ltlttli"" lh<ir 10'..,.,. lkfo,", lho WARN Ac' i! "' ... ",",inc for"mplo)"", to 

repon for woll< and be ,old thai t""i, r""'I)I)'. ,"OIT <>rom"" \\W; cl".i,,~. the,r 

jobs ""'1." oIimina't"d, tncy ncodoJ '0 de"" flUllheir locke!>'.)t d~.k>. :tnd ,h., !heY 

"" ... "ncmpl~)''''' olan~ w,th hwKlI'."<Js of,",," 1,,110"" ",me". 2. Tv i"~ mayors and "",,,,uun;,y kaden • eh,nce to prepare {or lart" I.yolfs ()I" 

0I05ings 'M' would inlpaClloca! """'kcsant! ""'en",,,_ A ,udden .hutdown ur. 

nujorcmplo)"rcould w,<:d . loc.1 budget.nd o'·c,wh.lm local SIIpport 

3gcncics. 
45 

3. To i:'''' lbe cmpluymcnl...,.,.;cc,-job lmining 'y""m, ,rod ",be, helping .g.:nck • 

• ""1Iih l,mo 10 ptoparc and ddi, ..... adjuOImonl .. "; .. '.0 m., u"'mplo)'~d in 3 

I'mely"' .. y. 

NO! ",",oflb._", th= in'''Il'3I' is ",,,"Cd b~ ~ bl:rnkt IIOIi<e 'Q cmpIQY«" Only w",,",. 

COIpOmtion Ita< "",ually decided ",oonduc, a ",an la)'Qff. (}f i. ",ownably «:ruin!hat it 

"ill, i. it ""Iuired ",Jeli,'c, lIO'ic •• Only lhen doe, i, mak.""'IUC to toll ,ndi",dUIIJ 

o"'ploy= lhat Iltci. job< rue hcing ciimina'ro. 

The WAR:>: I\c. provide. in <ct,ion 3(bX2)(A) IhO! ~An e<"ploytTm.)' ",dc, " pi.." 

closing 0. masslayoffbcf" .. the ""ndusion of'''' 60-;10)' !"-";<XI if.1K: eI<><inllm n .. "" 

lo),,,ff i. c"used by bu,iocss cireulll''''llCcs lhal '''"''' not r\:dsonably f"r\:Sttablc a> uri'" 

.ime Ih., noti~" wuuld ha,,, b«n ' '''Iuirod,- Thc case I,w .egarding ·· .. ...,nabl. 

f"",_ohil i.y" mIIh.d ••• ,ha, • ., omlll,,),o,;, nul ",qui",,, Iu ~iw" WARN nulicc un,il 

a ",,,,ing '" masolayorr is a prnbohili,y. m,her Ih.n a """" l"""ihililY. /I"W". l' 

Geltfrol V)'""mic~ CU'f>Oro,iQn, 137 .3 " 333 (S" Ci •. 1998) is 11K: leading c ... : 

··W. OHl" dclCrmi"" ",""!her ,hi: ,,"idene<: hefon: .hI: districi ooun ,upponcJ " 

finJing, '" a maU",. of law, 1M, 6O-day< bef"", ,Ite la)'orr. in Ihi' ca,., G.""",I 

Dynamics oould "'" re"""nably hOI" f""""on thc cancellal,on orthe A-12 .",,'racl 

which l"'-"<:i",laloo II1csc 1" )"011-'. "<t, tbo tI U",' iuo "r ",a,on. bl. fo,", ... bilily 

bog' . " u,hor 4u,·;ti.n; b)' . dol"in g "r •••• n.bl. f9"" ••• bilily" a,. , '.nd •• d. 

d'J<' tho \\'AR." Aot <0,-i. i9n th o b ... il il)' ofoo uofo« .. u bu,;".,., 

. 1"'tt"1>lan .. (i .• , , h • • on l .... o08o.I •• ,ion) or in".od , h. m . ... I"'" ihi'il)' of 

" ... h •• ; .... m".noo? W. o. n only oon. lud. thot i, i. ,h. " .... hohilil)' .. r 

.... Ur ... n« Ih' m.k.,. 0 hu ,in .. , . i",um, '. nC<' •· •••• on. bly fo r"" ... ltl. " ond 

IIt.rob)" for« ln"", " ,.oflh . § 2102 (h)(2)(A) u«p'ion ,. 'he MOliet 

' "'Iu' •• ",oo t. A I ..... ... nd.rd " '"uld II<" in,,, .. eli •• blt. Sin<:( o.~II"ion i,. 

"",.ihM,· e"e'Y lime 1110", i • • • "" ''''Of1\lJ1, dofcn", contractu .. ~e Gc""",1 

OJinomi"~ wtluiJ be 1"" to !he nerol.", "'''' ofnotifying emrloye .. of I"""ihl. 

<"01"'at" "",,"e ll •• ion 3,Id oo""omiwnt lay..,rr. .'~ry ,;m. Ih<:n: i, a ,\),1 "H""n .• ,><1 

,,,,,,,,,ienee teaches "Slhat 'hCf ..... in,-ariably,'"" "YOm"' .. which mOSI often do 

oot I<ad I" cun'ract e"""oll.,i",,:' 

Tbe 1):pa"meo' 01"1 ... \>0.', J" ly 30 ",h-iool)' <artfully "')'S 111.11 ;n Ih. ,,-aX. of .",,,,ifl. 

conlrt1CII.""in.,i<m' "aUk<! by ",quest,"l;o" 0. oUIba<:k. in r<>dernl ' pending IhJl ~"'''' 

job 10$< in I .... than 60 .... y .. I"" obligalion 10 &i'c "",i« \\'ill slill"", Iri~~.I'<'Il. "bul 

.mp ,,),,~ ",ill no' haw 10 pn",;oo ,110 rull pori<XI "fou';""--

'"In .",h in".."".'_ con''''''''''''' oblig.11ion '0 p""'id. oo.i«. undorllte WARN Acl 

would!lO' be 'riSl!"",d unlil,hc '1"-,,,i«c closings'" ..... 1.yul1, an: ...... nably 

for=o.blc .. ," 

lflbejob I ...... will ""cu, in60da)'So. lonier .n ... Ih< "'4uc\lrnlioo loke,efT.c<, 

c'mpIQ)'Ct'S will <,," bcexeuscd from si"in~ 1110 full notic._ T1IC lell.rlllal Cllai"""" 

Wahlbc.~, Klillt: and Roe scm 10 SocrtiliryofLnbor SIlIis. "hich as».:Rl'Ilth.,t ,110 DOL 

"do", IKII d,m) ""e tM' WARN nOli""" rumt . till b<: iw,..d.-;. in orr"" 
46 

Mo"""'",, the "Bum<m that ""'.u,. I)()L h,,, n<.>cnrun;~m.m "ulh<>rily it ""'uld ¥;"~ 

"" guidance i. boli..! by C<>ngr~,,'. a,.ignonc.,t "r ",gul"ul)' o.,oori,)' \0 ool in O<:<:1ion 

S ''(11)0 A.t and the r ... 1 ,h., lbe original ",gul,,;on, odd"".ed fl>o ;"Il<' ofblanket 

flOli« aoJ ",,'i.~ in the confc" of &""crnmcnl ""n"acl ",ne".,-,1. Seclion 8 ",od., in pM' 

"(a) Th. Sc<:",t..ry of Labor . /rall p"'",ribe such "'gul.tim .... may be n"''''''''I)' 10 ~"fI')' 

outlhi. Act:- (I;m['ha>i, oddod) 

Subs<'quCnt ",'Onli ,ho".,- th" ".,-i..wm uf ()()I:. I:ui<bncc, S"'I"",ualion did nof nccur <>" 

lanU3l)' 2. 20 13. It "'::IS poSliblc, bul widely "onsiokred imprnb.:Jble, The /l1l/H,,,,· ,,,,uri 

would h~,'" fOW>d no l1OIio" \0 be required. 

And ife""""e1<)c< Mel !<ent WARN "",i"" t<> lhei. el1lpl<»"" .. '"O)~''' OM 't.1te '"rid 

,e,pM'" offie"",,- "h" would II>cr ba,'e dcmt:? CQrnmunili,,,, mi~hll&ow beld u!IOk" 

rneeli"i", """kcrs and !Mi. spou"", "<luld ha,," suffered a","el,' d"'i"~ Ih. holidJ,'S. .tld 

.f~'<> would ha,. dire<of,>d ,,'WOreo> 10 lhe "TOng 1'1""", o,.~n I ... ·i, woodS. di"""'lin~ 

lhem from "",,;n8 lhe "'al pla"l d""inW' lha, happen (Of ,."son, un,elaled 10 

""I"""",' ion. How w.".ful ,,,,\Old il h.ve b<xn fo' I""aff,""Ied cmpl")",,. '0 MH begun 

"""'bing for and "king mhe. employ"",nl. lea"ing ,,"mk ." i"""'\'i ~,,",, itb mhe, 

<,mplu)"c ... or USinl: ""'job """",It and "'Sume wrili nl: Imininl: pro"j<k-J by ~\C 

W",Hurr<: I""~"m"r" ,kl !)nr:.SI<>p<",,"'CB·! 

Apart fmrn <I .... and disnrfll.ioo 10 In.: contr""!",' "orkfon:c. p",malu", no.icc would 

"''''''' dI:",ivcd COfl'I"K1",. of countle .. ,-alocd "",plo)",,_,. """k~", eff"".;".ly p""",red 

1<') loa,-' .hei, pMili"", in .. ar<b of job ""bilily, "hen mMl obsc,,·e .. belie"ed 'hot 

'."IU.,,"'IIioo was untikcl)' (il was .• ncr all. dcsi~n"d not I" ",,,ur). 

Ewn now. while;1 i. b<-c"m n~ mort ~rol>ab", !hat Uq,,..,ration mighl h.ppcn. 1M 

df« •• on an)" parti"ular """fraclor are unkoo\\";lble. PO"·""1"""ra. ion .• ...,h .n"'lod 

i\Gc"'), "ill ha"~ 10 allO' .. " the eu" """""I: i .. prvgn",,.. £",n,c"". conlfnef<,.., ~<, Only 

lilen will an)' bu,itlC$S be: <:en"in whethe,- lind how m.ny of its cmpIQ)'~es will be la id off 

bc-o.uoe of «que.t""ion 

I am ,,,,,fide-nl Ih.tl tite IIlJlkius rourt and other f<dcral couns (nc •• S-- I""hr~r ._ 

MeD"nm'" DoIJ)('''' erN" .. 98 rJd 1()~6(8" CiT. 1996» would ""Ie lho pr<.-JispMilion of 

Lon~ .... 10 ",.it unfil.1I< Ill" minUlO'-<>t"cI'cn latc'f-' " 1>01 "n any im",,"ant matt .. and 

wmrW e""sid« sequcslnllion nnd .n)" ",,!>seq""nl "onlt:lot:l , ,,,,,,,llatiun. ""f"",sc<",ble 

"",ii .hey actually occurred. 

, 
47 

Chairman WALBERG. Thank you, Mr. Eisenbrey. And I certainly 

concur with you as I said in my opening statement that sequestration is a terrible thing to happen. And its time appears to have 

come, sadly, after this House on two occasions offered an alternative to that. Nonetheless, we are here today. So, thank you. 

Ms. Furchtgott-Roth, thank you for being with us. It is your 

time. 
48 

STATEMENT OF DIANA FURCHTGOTT–ROTH, SENIOR FELLOW, 

MANHATTAN INSTITUTE FOR POLICY RESEARCH 

Ms. FURCHTGOTT-ROTH. Thank you very much for inviting me to 

testify today. Two days ago the Labor Department brought out its 

job openings and labor turnover data for December. That showed 

that the rate of job openings declined from 2.8 percent to 2.6 percent. The rate of hires declined from 3.3 percent to 3.1 percent. 

Workers in America are hurting. That is why it is so important 

that if there is a chance that they are being laid off they need to 

be given their WARN notices. We are now at February 14. The sequester is due March 1st. Even though you passed two bills to 

avoid the sequestration, it doesn’t look like Senate and President 

Obama are following suit. 

The biggest problem, I would say, in the economy is not sequestration. It is lack of economic growth. It is the growing government 

deficit. Government outlays have grown from about 20 percent of 

GDP in 2007 to about 24 percent of GDP. The deficit has ballooned. 

The public debt has ballooned. We are talking about cutting 2 percent—about 2 percent of federal spending. Surely as you have 

shown with your alternative bills, we should be able to do that. 

In terms of these WARN notices we are not talking about blanket WARN notices. Large defense firms are undoubtedly planning 

for the sequester. It would be irresponsible of them not to do this. 

And the purpose of the WARN notices was just to allow them to 

share these plans with their employees so that their employees are 

not left surprised. 

Just as the CEOs are looking at plans for the companies and are 

looking at what their shareholders expect them to do, they should 

be sharing this information with the workers who also have the 

right to plan. And employees are not stupid. They know that the 

January 1 sequester was put off. Here it is February 14. They 

might be thinking the March 1st one would be put off too. But it 

is up to them to have that knowledge. 

There are probably other cuts that could be made in DOD. I 

would just like to suggest one. Stop buying green fuels. The military has made a push towards green fuels. This is costing about 

$27 a gallon. Regular fuel is about $3.50 per gallon. I would suggest instead of eliminating the submarines or cutting back on submarines, instead of stopping to refuel the Lincoln they should be 

thinking about how to make the military more efficient rather than 

less efficient by going green. 

I calculate that if 10 percent of workers were laid off in the seven major defense firms penalties would be about $412 million in back 

pay, plus about $100 million in benefits. And it is not up to the Office of Management and Budget to say well the Defense Department is just going to be paying those penalties and costs. Twenty percent, I calculate, it would be about $825 million in back pay, $200 million in benefits for about a billion dollars. And 

these amounts need to be appropriated and authorized by Congress, not just told by OMB that it would pay the penalties. 

It is unconscionable for the Office of Management and Budget, 

for our government to be telling companies that they should break 

the law and that they will pick up the penalties for doing this. This 

is the kind of thing we read about happening in countries such as 
49 

Russia and Venezuela. We should be very shocked that it is happening here. 

And defense companies are being put in a very awkward position 

since the federal government is their major employer. And if someone comes to them and asks them to do this they are caught between a rock and a hard place. 

So, with that I would just like to summarize that I think economic growth is the most important thing to do. We need to be cutting spending. We should not be considering raising taxes, which 

we have just done on January 1st, because that slows economic 

growth. 

The American worker deserves a growing economy. A growing 

economy means an efficient economy, low taxes, low burden of regulation and clear, predictable rules for how to operate. 

Thanks very much for allowing me to testify today. I would be 

glad to answer any questions. 

[The statement of Ms. Furchtgott-Roth follows:] 

Prepared Statement of Diana Furchtgott-Roth, Senior Fellow, 

Manhattan Institute 

Chairman Walberg, Ranking Member Courtney, members of the Committee, I am 

honored to be invited to testify before you today on the subject of employers’ WARN 

Act responsibilities. I am a senior fellow at the Manhattan Institute. From 2003 

until April 2005 I was chief economist at the U.S. Department of Labor. From 2001 

until 2002 I served at the Council of Economic Advisers as chief of staff. I have also 

been a senior fellow at the Hudson Institute and a resident fellow at the American 

Enterprise Institute. I have served as Deputy Executive Secretary of the Domestic 

Policy Council under President George H.W. Bush and as an economist on the staff 

of President Reagan’s Council of Economic Advisers. 

The Budget Control Act of 2011, signed into law by President Obama on August 2, 2011, put in place a sequester of $1.2 trillion over the next ten years if Congress 

did not cut spending.i Though the original sequester was scheduled for January 2, 

2013, the American Taxpayer Relief Act of 2012 moved the date to March 1, 2013.ii

Under current law, according to a September 14, 2012 White House report on details of the sequester, the Pentagon’s spending will decline by over $500 billion over 

ten years.iii

This means that defense contractors will in all likelihood have to lay off workers, 

because of cuts to spending used to fund contractors’ work. House Budget Committee Chairman Paul Ryan predicted recently that sequestration will occur in 

March. Like Congressman Ryan, businesses can foresee the layoffs that will be necessary—and this predictability triggers a legal requirement that they send out notices to their employees 60 days in advance. Currently, they are not doing so. 

The requirement that firms expecting mass layoffs, plant closings, or certain other 

employment losses inform their employees 60 days in advance comes from the Worker Adjustment and Retraining Notification Act of August 1988, passed by a Democratic Congress over President Ronald Reagan’s veto.iv The WARN Act is meant to 

allow workers to prepare themselves for the risk of layoff, temporary or permanent.v

Congress was so adamant on the necessity of the WARN Act that it did not permit employer waivers. No government agency can exempt firms from issuing the notice of potential job loss. 

Sending out WARN notices is routine. Firms that sent out recent WARN notices 

include American Airlines, Pfizer, and Sodexo. In 2011 Qimonda AG, an electronic 

memory products manufacturer, reached a $35 million settlement for not sending 

out notices in time.vi

Informed workers might look for other jobs, skip a planned vacation, or delay the 

purchase of a car or dishwasher. Or, another member of the family might start looking for a job. 

WARN notices serve a purpose, because laid-off workers generally see a decline 

in earnings. It is particularly hard to find a job in today’s economy. In January the 

economy created only 157,000 jobs, and the unemployment rate rose to 7.9 percent. 

The economy has 3.2 million fewer jobs than at the start of the recession, in December 2007. On Tuesday the Bureau of Labor Statistics issued its Job Openings 

and Labor Turnover Survey results for December 2012. It showed that rates of em-
50 

ployer hiring, job openings, separations, and quits have not yet recovered from the 

recession. 

The poor economic climate makes it even more surprising that the Labor Department and the White House have asked federal contractors to break the law and not 

send out required WARN notices. Many contractors were expecting layoffs on January 2, and are now expecting layoffs on March 1. Some have already reduced hiring 

in anticipation of future spending cuts. 

The Labor Department, which supposedly has employees’ best interests at heart, 

issued a guidance notice on July 30, 2012 discouraging firms from issuing WARN 

notices. 

The guidance notice from Assistant Secretary Jane Oates said: ‘‘WARN Act notice 

to employees of Federal contractors, including in the defense industry, is not required 60 days in advance of January 2, 2013, and would be inappropriate, given 

the lack of certainty about how the budget cuts will be implemented and the possibility that the sequester will be avoided before January.’’ vii

The July guidance letter was followed by a Memorandum for Chief Financial Officers and Senior Procurement Executives of Executive Departments and Agencies 

from the White House Office of Management and Budget. Dated September 28, 

2012, the memo counseled defense employers not to issue layoff notices on November 1. It is the first time in history that the White House has asked firms not to 

file layoff notices. 

The reason for the memo was that ‘‘Despite DOL’s guidance, some contractors 

have indicated they are still considering issuing WARN Act notices, and some have 

inquired about whether Federal contracting agencies would cover WARN Act-related 

costs in connection with the potential sequestration.’’ viii

Daniel Werfel, Controller of OMB’s Office of Federal Financial Management, and 

Joseph Jordan, Administrator for Federal Procurement Policy, assured employers 

that if they did not send out layoff notices and layoffs occurred, the ‘‘contracting 

agency,’’ namely the Pentagon, would absorb the penalties and attorneys’ fees the 

employers would have to pay, a significant cost to taxpayers. 

The White House does not have the authority to offer to pay the costs, because 

such funds are authorized and appropriated by Congress, i.e. Members of this Committee. Some senators, such John McCain and Lindsay Graham, said in October 

that they will not allow government funds to be spent on penalties and costs.ix

However, OMB’s memo states that if sequestration occurs and the contractor has 

followed Labor Department guidelines, ‘‘any resulting employee compensation costs 

for WARN Act liability as determined by a court, as well as attorneys’ fees and 

other litigation costs (irrespective of litigation outcome), would qualify as allowable 

costs and be covered by the contracting agency, if reasonable and allocable.’’ 

If firms don’t file WARN notices and certain levels of plant closings or layoffs 

occur, employers are liable for penalties of 60 days back pay and benefits paid to 

workers. 

What could that cost? 

Lockheed Martin has stated that it expects to lay off 10,000 employees if a sequester occurs. Given other firms’ current payrolls, if they laid off 10 percent of their 

workers, I estimate that Boeing would lose 17,000 employees; General Dynamics, 

9,500 employees; Northrop Grumman, 7,000; and Raytheon, 6,800, and SAIC 4,000. 

This adds up to 54,300 employees. 

If the firms do not file WARN Act notices, they might be liable for 60 days back 

pay in penalties. Using BLS’s average weekly earnings in the industry of $951, I 

calculate that the wage bill would come to about $76 million for Lockheed Martin 

for its 10,000 workers. Boeing would owe around $129 million; General Dynamics, 

$72 million; Northrop Grumman, $53 million; Raytheon, $52 million; and SAIC $30 

million. 

These contractors and the Defense Department would be liable for $412 million 

in back pay, plus benefits. If 20 percent of employees were laid off, the bill would 

run to $825 million plus benefits. 

Benefits liabilities would be significant. A 2012 CBO study noted that 30 percent 

of a private-sector employee’s total compensation cost was tied to benefits.x Using 

even a conservative version of that ratio, benefits owed could top $100 million in 

a 10 percent layoff scenario. 

These amounts do not account for court costs and attorney fees, which might run 

into additional tens of millions. 

Defense contractors are being put in an untenable position. They can break the 

law and keep the White House happy, or follow the law and annoy their major customer. 

I am not privy to internal White House discussions, but it is likely that the White 

House asked contractors to break the law in the interests of the re-election of Presi-
51 

dent Obama. The Obama administration was concerned that layoff notices mailed 

on November 1, 2012, could cost the Obama-Biden ticket votes, especially in Ohio 

and Virginia, swing states with a strong defense presence. 

Since firms have stated they will not issue the WARN notices, their potential liability in penalties should be declared on their next quarterly SEC filings. Otherwise, they might be liable for additional millions from shareholder suits. 

However, this major campaign donation to President Obama has not appeared on 

any campaign disclosure forms. 

The Administration has devoted substantial resources to making sure that companies are run efficiently. The Dodd-Frank labyrinth, with its armies of regulators, is 

supposed to make sure that companies do not make financial mistakes. Yet the penalties for not filing WARN notices could reach into the millions of dollars. Should 

not shareholders be informed? 

On January 20 and 21, President Obama was sworn in for his second term. He 

took the oath of office, in which he swore to defend the Constitution. The Constitution’s Article II, Section 3 states that the president ‘‘shall take Care that the Laws 

be faithfully executed.’’ Yet the White House has told some of the largest corporations in America to break the law in order to help re-elect a sitting president, and 

offered to pick up the penalties and court costs. 

If this were Russia, no one would think twice. But in America, if we’re not 

shocked, something is very wrong. 

ENDNOTES

i 112th Congress, 1st Session, Budget Control Act of 2011, Section 251a, http://www.gpo.gov/ 

fdsys/pkg/BILLS-112s365enr/pdf/BILLS-112s365enr.pdf. ii 112th Congress, 2nd session, American Taxpayer Relief Act of 2012, Title IX, Section 901, 

http://www.gpo.gov/fdsys/pkg/BILLS-112hr8eas/pdf/BILLS-112hr8eas.pdf. iiiWhite House Office of Management and Budget, OMB Report Pursuant to the Sequestration 

Transparency Act of 2012 (P. L. 112—155), September 14, 2012, p. 5, http:// 

www.whitehouse.gov/sites/default/files/omb/assets/legislative—reports/stareport.pdf. iv 110th Congress, House Report 110-410, http://thomas.loc.gov/cgi-bin/cpquery/ 

?&dbname=cp110&sid=cp1100AFa6&refer=&r—n=hr410.110&item=&sel=TOC—18846&. v U.S. Department of Labor, Employment and Training Administration, The Worker Adjustment and Retraining Notification Act Fact Sheet, http://www.doleta.gov/programs/factsht/ 

warn.htm. viKlehr Harrison Harvey Branzburg LLP, Qimonda WARN Act Case Information, May 17, 

2011, http://www.klehr.com/C7756B/assets/files/News/SCN—20110517115438—001.pdf. viiOates, Jane, Guidance on the Applicability of the Worker Adjustment and Retraining Notification (WARN) Act, 29 U.S.C., 2101-2109, to layoffs that may occur among Federal Contractors, 

including in the Defense Industry as a Result of Sequestration, Employment and Training Administration Advisory System, July 30, 2012. viiiWerfel, Daniel I. and Joseph G. Jordan, Memorandum for the Chief Financial Officers and 

Senior Procurement Executives of Executive Departments and Agencies, Executive Office of the 

President, Office of Management and Budget, M-12-19, September 28, 2012, http:// 

www.whitehouse.gov/sites/default/files/omb/memoranda/2012/m-12-19.pdf. ixSenator Lindsey Graham, Senators Urge Defense Contractors To Follow The WARN Act, 

Press Release, October 5, 2012, http://www.lindseygraham.com/2012/10/release-senators-urgedefense-contractors-to-follow-the-warn-act/. x Congressional Budget Office, Comparing the Compensation of Federal and Private-Sector 

Employees, January 2012, p. 9, http://www.cbo.gov/sites/default/files/cbofiles/attachments/ 

01-30-FedPay.pdf. 

Chairman WALBERG. Thank you. We appreciate your comments. 

And thank you to all of the witnesses for your insights and your 

thoughts on this issue. I now recognize myself for 5 minutes of 

questioning. 

Assistant Secretary Oates, again thank you for being here, were 

you aware of the efforts in letters from Chairman Kline, myself, 

from our committee, phone calls, meetings that have been going on 

for 6 months trying to get answers on this very issue had been undertaken? Were you aware of those efforts? 

Ms. OATES. Mr. Chairman, I was tangentially aware of the conversations back and forth. But oversight is handled by our Office 

of Congressional and Government Relations. It is not something 

handled in the Employment and Training Administration. So, I 

wouldn’t have—I wouldn’t be able to answer any specific questions. 
52 

It is a small building. Everybody knows pretty much what everybody is doing. But I was not involved in any of it. 

Chairman WALBERG. Well, that is a concern to me as well because you know last night as I mentioned in my opening comments, 

this packet was slipped under a door after 9:00. I really don’t know 

what is in it other than a disk. Our staff doesn’t know for certain 

all that is in it other than it is about 400 pages of information, 

hopefully containing information we request in our letters. 

Do you know if it does contain that information that we requested? 

Ms. OATES. The direct answer would be no, sir. But I need to tell 

you that the department takes seriously all of the questions that 

Congress puts up there. So, if you are asking my opinion, my opinion would be that OCIA answer to the best of their ability. 

Chairman WALBERG. So the best ability in 6 months since we initiated the request on this, as we all would agree, a very, very critical issue of sequestration and the use of the WARN Act. Regardless of where we stand on the sequestration itself, whether we 

think it is going to result in as many layoffs as it potentially could. 

I would hope it wouldn’t take calling a subcommittee hearing in 

order to get information like this, 400 pages of it, the night before 

the hearing. And I guess I would ask would you concur with that? 

That it shouldn’t take calling a hearing to get information; that the 

oversight responsibility of this committee and many other committees have to be carried out. 

Ms. OATES. Sir, you know that I spent the majority of my career 

here in Washington on the other side of this bench staffing members. So, I understand your frustration. 

But I hope you understand that I am saying to you I am on a 

team and OCIA is part of that team. And I have to assume that 

they are doing everything in their power to answer your questions 

as fully as possible. And I will be happy to take your concerns back 

to them when I go back to the Department of Labor. 

Chairman WALBERG. Well, I would appreciate that. I would appreciate if you could give me your assurance that in the future 

when we request information like this we won’t have to go through 

this process, but we will have timely response. Even if it is saying 

we are still compiling. 

But I would hate to think that there is obstruction taking place 

of the efforts that we ought to be working together on. If I could 

have your assurance on that for the future I would appreciate that. 

Ms. OATES. I can’t give you my assurance, sir. If you ask me that 

about ETA I would do my best to give you my assurance. What I 

can assure you of is that I will take your concerns back immediately to OCIA and to the departmental leadership. 

Chairman WALBERG. Well, let’s talk about ETA then—— 

Ms. OATES. Okay. 

Chairman WALBERG [continuing]. In relationship to this. In the 

wake, as was expressed by Mr. Eisenbrey, in the wake of Hurricane Katrina in 2005 the Employment and Training Administration issued a fact sheet to aid employers in understanding their requirements under the WARN Act. That is a matter of record. 

Ms. OATES. Yes, sir. 
53 

Chairman WALBERG. The fact sheet specifically states, and I 

quote—‘‘employers should be aware that the U.S. federal court solely enforces the WARN Act, and these answers are not binding on 

the courts.’’ That was what was stated in that advisory. 

Ms. OATES. Yes, sir. 

Chairman WALBERG. You concur. Your most recent guidance in 

reference to what we are here about today contained no statement 

or qualification equal to this, or more importantly at all. Could you 

please explain the Employment and Training Administration’s 

change in policy regarding binding nature of guidance issued on 

the WARN Act in this case? 

Ms. OATES. So, as you know, Mr. Chairman, I wasn’t in this position in 2005. But that guidance still remains in place today and is 

used for a number of businesses that are incurring the same—— 

Chairman WALBERG. But was not in your guidance submitted—— 

Ms. OATES. No, no. 

Chairman WALBERG [continuing]. Or this particular situation. 

Ms. OATES. But it exists on our WARN Web page and is still 

used by people. The audience for that guidance in 2005 were employers, and it was very important to state that. The audience for 

my guidance that was issued last summer were the state workforce 

agencies and the local workforce agencies. 

Answering a question does someone giving a blanket statement 

about the possibility of sequestration respond to the requirements 

in the WARN Act? So, we were getting those questions from a 

number of people. 

The reason for the guidance was to make sure that states knew 

employers have the right to have good, strong communications with 

their employees at all times. But until they have the specific information required by the WARN Act, they could not use conversations about pending sequestration to count as their activities documented under the WARN Act. 

So, the importance of that guidance in the summer was to clarify 

that at that time we did not have sufficient information to be able 

to allow employees to give the information—I am sorry, employers—the specific information that they would need to comply with 

the WARN Act. 

Chairman WALBERG. The—and I appreciate that explanation. 

But still the policy remains that you don’t have the authority to 

make that statement to employers or state agencies dealing with 

what ought to be the part—what ought to be the requirements of 

the WARN Act. And that is our concern, that there seems to be a 

different means of handling it this time than others. 

My time has expired. But I hope that further questions bring to 

light why the change went on at this point. I thank you. 

I now recognize the ranking member, Mr. Courtney, for his questions. 

Mr. COURTNEY. Thank you, Mr. Chairman. 

Again, at the outset I just want to share with the group here 

today that when Undersecretary Carter was—for DOD—was at the 

hearing yesterday, again he did start to lay out specifics in terms 

of you know if the catastrophe occurs. And made it very clear, unfortunately, the civilian workforce at the Department of Defense is 
54 

probably going to be subject to some pretty heavy layoffs, which is 

sickening. 

I mean 87 percent of those reside outside of D.C. I mean they 

provide critical support for military installations, you know programs of all sorts. O&M, you know Operations & Maintenance repair work again, would probably again be something that in this 

fiscal year would be sort of on the hit list or targeted, again, but 

not on March 1st. 

You know there is going to be sort of an implementation rationale even though this is an irrational process that they would try 

and lay out. So, again, I just—the granular presentation that was 

given to us yesterday, again, is that again, it is not going to be 

done by the department all at once on one single day. 

Undersecretary Oates, just to sort of talk TEGL here for a 

minute, again, a TEGL is not sort of some once in a lifetime event. 

I mean it is something that your department is in the business of 

issuing on a pretty frequent basis. Is that correct? 

Ms. OATES. Yes, Congressman. 

Mr. COURTNEY. And so I mean I have some statistics here that 

it looks like in 2012 you had a total of 51 TEGLs that were issued. 

Ms. OATES. Yes, sir. 

Mr. COURTNEY. Okay. So I mean this is nothing sort of extraordinary in terms of what the department was doing in terms of this 

normal administrative act. 

Ms. OATES. That is correct. We issue them so that there is consistency. There is over 1,000 employees nationwide in the Department of Labor under ETA. And anybody could call any of them. 

The TEGLs come out so that there is consistency. No matter who 

you ask they have the same information so you are not getting different information from different people. 

So, it is a routine thing. We also have other instruments like 

UPLs for UI and TENs. We issue, again, an equal number of those 

every year. 

Mr. COURTNEY. Okay. And just, again, just to underline the 

point, this request for an opinion did not come from the White 

House. It did not come from David Axelrod. It came from state 

labor departments across the country. Is that correct? 

Ms. OATES. And local labor force people too. But yes, sir; just to 

clarify, I never had a discussion with the White House about this 

guidance. 

Mr. COURTNEY. Thank you. Okay. And so—— 

Ms. OATES. They don’t routinely call me. 

Mr. COURTNEY. Yes. You are not alone. 

But in any case, Mr. Eisenbrey, again, when WARN was designed, I mean again it really was focused on trying to sort of trigger assistance to workers, right? I mean and that is why there is 

a pure—I mean a perfect logic to the fact that that would be the 

entity that would be contacting the Department of Labor looking 

for some help. Isn’t that correct? 

Mr. EISENBREY. That is right. The act was part of a larger effort 

to deal with waves of plant closings that were happening in the 

1980s. It set up State Dislocated Worker Units to respond, that are 

part of the system that Ms. Oates oversees. 
55 

And it required notice to the state so that they could respond to 

local governments so that they could begin to prepare for what 

could be a disaster in a small community, or it would always be 

of a concern anywhere, a mass layoff. And then for the workers, 

and they were supposed to get specific notice, not just we were very 

concerned and Congressman Ford and the other authors made sure 

that the department forbade blanket notices as a way to comply 

with the act. 

What we wanted was people not just to know that there was a 

concern, but that their job was going to be eliminated. They needed 

to change their behavior and prepare for what would be—— 

Mr. COURTNEY. So—— 

Mr. EISENBREY [continuing]. Very hard. 

Mr. COURTNEY [continuing]. The opposite happened. You said, 

yes, you know WARN Act, all hands on deck. Notices went out. 

State labor departments you know kind of activated. I mean the 

fact is is that it would have been really obviously a stressful reaction for people. But at the end of the day it wouldn’t have accomplished—— 

Mr. EISENBREY. Right. What would they have done? They 

wouldn’t have known where to send their resources. A rapid response unit, where would they go to? I mean Ms. Furchtgott-Roth 

talks about thousands and thousands of people who are going to 

lose their job. 

We don’t know that yet, you know where they are going to be. 

Would they go to every employer, to every facility? It would be a 

real waste of resources to do that. 

Mr. COURTNEY. Thank you. I yield back. 

Chairman WALBERG. Gentleman’s time is expired. I recognize Dr. 

DesJarlais. 

Mr. DESJARLAIS. Thank you, Mr. Chairman. 

Mr. Gies, would you expect litigation to ensue, even with the 

DOL and OMB guidance? 

Mr. GIES. Yes. Yes, congressman. And the reason I think, to 

elaborate briefly on that, is I think we find as lawyers representing 

companies any decision you make can be second-guessed, and this 

would be like most others. 

Mr. DESJARLAIS. Okay. How long would a typical WARN Act 

cause of action take to complete if it were to go to trial? 

Mr. GIES. It depends on how busy the federal court is. It could 

very easily be 2 years before you get to jury trial if the case went 

that far. And I say jury trial; that is another open legal issue 

whether or not there is a right to a jury trial. But irrespective, in 

many busy federal courts it might be 2 years. 

Mr. DESJARLAIS. Okay. Can you discuss the cost associated with 

WARN Act litigation? 

Mr. GIES. Only generally. I mean, you have heard from the other 

witness an estimate of what the costs would be. I mean the statute 

is pretty clear in terms of what the back pay and benefits liability 

would be. Attorney’s fees is like any other form of complex civil litigation how much it might cost. 

Mr. DESJARLAIS. Okay. The OMB guidance purports to reimburse contractors who are subject to litigation for following DOL 
56 

guidance irrespective of litigation outcome. Is this generally an allowable cost? 

Mr. GIES. I think that is a contract-specific question. The general 

rule is that costs that are reasonable are reimbursed. But that is 

a decision made by the contracting officer on a contract-specific 

basis. 

Mr. DESJARLAIS. Okay. What triggers the need to provide a 

WARN Act notice? 

Mr. GIES. I am sorry, sir? 

Mr. DESJARLAIS. What triggers the need to provide a WARN Act 

notice—— 

Mr. GIES. Oh, the trigger? Well, as you have heard in brief it is 

an employment loss of a certain number of employees. If it is a 

mass layoff or a plant closing, if it is a complete closure of a facility, that is a single side of business. 

Mr. DESJARLAIS. Does it have to be public knowledge? 

Mr. GIES. No. 

Mr. DESJARLAIS. It does not. Okay. 

Do you believe the administration’s guidance from DOL and 

OMB will indemnity contractors from litigation on the federal 

WARN Act? What—do you believe it will indemnify contractors 

from litigation? 

Mr. GIES. I think it is impossible to know today. 

Mr. DESJARLAIS. Okay. Are contractors correctly considering 

sending out WARN notices despite the encouragement from DOL 

and OMB to refrain from sending such notices? 

Mr. GIES. I think each company is thinking hard about that, as 

you have heard from lots of people on this panel. And each company will make its own decision based on what they know. 

Mr. DESJARLAIS. Okay. I assume you have had an opportunity to 

read Assistant Secretary Oates’ written testimony. 

Mr. GIES. I did. 

Mr. DESJARLAIS. In your opinion does her testimony make clear 

the department’s guidance and any assurance it provided stakeholders applies to the current March 1st sequester? 

Mr. GIES. It is not clear to me. 

Mr. DESJARLAIS. That is all I have. I yield back. 

Chairman WALBERG. I thank the gentleman. 

I now recognize for questioning, Mr. Bishop. 

Mr. BISHOP. Thank you, Mr. Chairman. Thank you for holding 

this hearing. 

I first want to observe that I am—how delighted I am. This is 

my sixth term on this committee and I am delighted to see that we 

are having a hearing, the purpose of which, I hope, is to protect 

worker rights. That is a rare occurrence on this committee. 

We spend most of our time in this committee when the Republicans are in the majority taking up measures or looking at issues 

in which we are endeavoring to pursue the protection of employer 

rights, often at the expense of employees. And so I am delighted 

that we are focusing on a concern for employees. 

I also think that we are engaged in what might be called revisionist history, and we are also engaged in some denial of current 

reality. I noted the chairman in his opening statement said that 
57 

President Obama insisted on the sequester. I note that we now are 

referring to the sequester as the ‘‘Obamaquester.’’ 

I also note, as the ranking member said, the chairman—that 

Speaker Boehner said that he got 98 percent of what he wanted out 

of the deal that brought us the sequester. And I think we can all 

agree that the sequester constitutes a touch more, a touch more 

than 2 percent of the deal. 

I also note that the chairman said that sequestration is not how 

Washington should conduct the people’s business. I couldn’t agree 

more. I absolutely agree. But I think it is instructive to enter into 

the record statements that our colleagues on the Republican side 

of the aisle have made. 

Representative Mike Pompeo, ‘‘The sequester is here. It is time. 

We have got to get these spending reductions in place. It is going 

to be a home run.’’ 

Representative Cynthia Lewis, ‘‘Sequestration will take place. I 

am excited. It will be the first time since I have been in Congress 

that we really have significant cuts.’’ 

Representative Paul Broun, ‘‘I want to see sequestration go into 

place.’’ 

Representative Steve Scalise, ‘‘The consensus is we want the sequester numbers to come in and to finally see spending reduced in 

Washington.’’ 

Representative Mick Mulvaney, ‘‘We want to see—keep the sequester in place, and take the cuts we can get.’’ 

And finally, Representative DesJarlais, a member of this committee, ‘‘Sequestration needs to happen. Bottom line, it needs to 

happen, and that is the deal we struck to raise the debt limit.’’ 

So, this is not an issue, clearly, where there is unanimity on the 

Republican side of the aisle that this is ‘‘not the way we should 

conduct the people’s business.’’ In my view it is not the way we 

should conduct the people’s business. And 14 days away from a 

self-imposed crisis, we should be focusing all of our efforts on how 

to avoid sequestration in a fair and balanced way, not by trying to 

score political points and assess blame. 

So, let me ask Ms. Furchtgott-Roth a question. In the—on the 

last page of your written testimony you say, and I am now going 

to quote. I am going to read from it. ‘‘I am not privy to internal 

White House discussions, but it is likely that the White House 

asked contractors to break the law in the interest of the reelection 

of President Obama.’’ 

You then go on to say two paragraphs later ‘‘On January 20th 

and 21st President Obama was sworn in for his second term. He 

took the oath of office in which he swore to defend the Constitution. The Constitution’s Article II Section 3 states that the president shall ‘take care that the laws be faithfully executed’ yet the 

White House has told some of the largest corporations in America 

to break the law in order to help reelect the sitting president.’’ 

That is a pretty serious charge. Now, may I ask, aside from what 

I presume to be a willingness to attribute to the president the most 

nefarious of motives whenever he takes a position, what evidence 

do you have to substantiate that pretty serious charge? 

Ms. FURCHTGOTT-ROTH. The OMB memo. The OMB—— 

Mr. BISHOP. Have you—— 
58 

Ms. FURCHTGOTT-ROTH [continuing]. Is out of the White House. 

Mr. BISHOP [continuing]. Submitted your concerns to the Department of Justice? 

Ms. FURCHTGOTT-ROTH. No. 

Mr. BISHOP. Have you asked any member of Congress to institute proceedings in which the impeachment of the president would 

be undertaken for failure to uphold the Constitution? 

Ms. FURCHTGOTT-ROTH. I was not asked my opinion by any member of Congress. 

Mr. BISHOP. I am asking your opinion right now. 

Ms. FURCHTGOTT-ROTH. I have not spoken to any member of 

Congress. 

Mr. BISHOP. Will you? This is a very serious charge you have leveled against the president. 

Ms. FURCHTGOTT-ROTH. Will I ask a member of Congress—— 

Mr. BISHOP. Yes. Yes. 

Ms. FURCHTGOTT-ROTH [continuing]. To start an impeachment 

proceeding? 

Mr. BISHOP. Yes. 

Ms. FURCHTGOTT-ROTH. I am just an economist and I 

wouldn’t—— 

Mr. BISHOP. I understand. I understand that. But you have leveled a very serious charge against the president of the United 

States in a subcommittee of the United States Congress. 

Ms. FURCHTGOTT-ROTH. Well, it is very serious when the Office 

of Management and Budget asks defense contractors to break the 

law because the—— 

Mr. BISHOP. And the Office of Management and Budget—— 

Ms. FURCHTGOTT-ROTH [continuing]. Was supposed to go out November—— 

Mr. BISHOP. The Office of Management and Budget memorandum to which you refer specifically says that contractors should 

break the law? 

Ms. FURCHTGOTT-ROTH. It says—it advises them not to send out 

the WARN notices, and it says the contract agency—— 

Mr. BISHOP. But we have—— 

Ms. FURCHTGOTT-ROTH [continuing]. Will pick up—— 

Mr. BISHOP. We have an advisory opinion from the Department 

of Labor that says that sending out the WARN notice is not required in this circumstance. Is that not correct? 

Ms. FURCHTGOTT-ROTH. That is what the Labor Department 

said. I don’t think that that is true. 

Mr. BISHOP. Are you attributing nefarious motives to the Labor 

Department as well? 

Ms. FURCHTGOTT-ROTH. No, but I am saying they are incorrect. 

Companies should follow the law. 

Mr. BISHOP. They are incorrect. 

Ms. FURCHTGOTT-ROTH. Yes. 

Mr. BISHOP. So, if the OMB followed what you characterize as an 

incorrect guidance, you have inferred from the following of that incorrect guidance that OMB was encouraging the president to break 

the law. So at a minimum is it not fair to understand that if the 

OMB—pardon me, the Department of Labor guidance was incorrect, an opinion I don’t share, and OMB acted on an incorrect guid-
59 

ance, is it not fair, reasonable, if all of those factors were in place, 

to assume that the OMB acted incorrectly and advised the president incorrectly as opposed to advising the president to break the 

law? Is that not a reasonable conclusion from the set of facts that 

you are presenting? 

Ms. FURCHTGOTT-ROTH. That certainly is one possible conclusion. 

Another is that the WARN notice—— 

Chairman WALBERG. The gentleman’s time is expired. We have 

offered the latitude for that. I think questions—the comments—— 

Mr. BISHOP. I thank the chairman. 

Chairman WALBERG. Thank you. 

I now recognize Dr. Bucshon. 

Mr. BUCSHON. Thank you, Mr. Chairman. 

In deference to Mr. Bishop’s attack to try to divert the conversation away from the real issue, I really find it ironic that the administration and people on the other side of the aisle are here essentially arguing against employer’s rights—employee’s rights. This is 

a hearing about employee’s right to know. 

It is very ironic because the discussion, in my view, is clearly 

about that. And let us be clear. This was about reelecting the president. This was about large amounts of employees not knowing they 

were going to be let go, but prior to November 6th of 2012. In my 

view that is what this is about. 

Let me quote from Senator Obama, and this has been quoted already when he talked about this. ‘‘American workers’’—this is in 

the discussion of the WARN Act 2008. ‘‘American workers who 

have committed themselves to their employers expect in return to 

be treated with a modicum of respect and fairness. Failing to give 

workers fair warning ignores their need to prepare for the transition. It adds insult to injury to close a plant without warning employees. Workers and their communities have a right to know when 

they are facing a serious risk of a plant closing.’’ 

We are not talking about a blanket statement. We are talking 

about companies that know if they are facing the loss of a contract 

or other things, specifically which employees are going to lose their 

jobs. They know that. And if they don’t, then they are not doing 

their job. 

This is just a long list of things where the administration subverts Congress. And I can list; it is a long list. Immigration, welfare, NLRB appointments that were proven to be unconstitutional, 

and they have even attempted to tell Congress when or when we 

are not in session. So, it is not about a blanket notice. 

What I wanted to ask you, Ms. Oates, is do you have a list and 

the letters from the specific states and the specific people that ask 

you to give guidance on this? Who—I—and if you do I would like 

those submitted to the committee because I am assuming they 

don’t just pick up the phone and say can you do a guidance on this. 

There is written correspondence between the Labor Department 

and people who request these things. 

If that is true, then I am requesting that all of those letters from 

everyone that requested this guidance be submitted to Congress. 

Can you do that? Can you provide that? 

Ms. OATES. Well, let me first answer your question, congressman. 

The conversations that I have with people—and this is how I con-
60 

duct operations as many of the members of this committee know, 

I do have state labor commissioners from both parties who pick up 

the phone and call me on my office phone or my cell phone. 

I also spend a lot of time, once a month I meet with all the IGOs 

and spend a lot of time when I am out in the areas. 

Mr. BUCSHON. In this type of controversial guidance that you 

knew was going to be controversial—this is a huge issue, wouldn’t 

you—I would expect that it would be more than a call to your cell 

phone asking this kind of guidance to be released. 

Ms. OATES. Sir, with great respect, at the time that we offered 

this guidance there was not a sense that there was going to be any 

controversy. I mean we had heard from a number of—— 

Mr. BUCSHON. I would disagree with that opinion. 

Ms. OATES. Well, but I am telling you honestly that we heard 

from a number of state and local workers—— 

Mr. BUCSHON. I am not denying that you are. I just want to 

know who they are. 

Ms. OATES. I could get—I would be happy to share my calendar 

so you could see an area where—who I met with—— 

Mr. BUCSHON. I just want Congress to know you are talking 

about states submitting requests for guidance, companies submitting requests. 

Ms. OATES. No, sir. I never said anything about a company. 

What I said—— 

Mr. BUCSHON. Okay. States. That is fine. And—— 

Ms. OATES. I didn’t say they submitted—— 

Mr. BUCSHON. I would like to know which states. 

Ms. OATES. They—— 

Mr. BUCSHON. Because my argument will be that it is a bunch 

of blue states that are—that are doing this. And if that is not true 

I would just like to know the—I would just like to have the list. 

Ms. OATES. I don’t have any correspondence to give you, sir, 

so—— 

Mr. BUCSHON. The other question I had—have is on this. Who 

made the decision to offer taxpayer funds to corporations that don’t 

comply with the WARN Act? Did you make that decision? Or who 

told—who told you, as part of your guidance, to offer—just offer 

taxpayer funds to companies if they get sued because they have 

violated this act? I would like to know specifically—— 

Ms. OATES. Certainly. 

Mr. BUCSHON [continuing]. Who told you to do that. 

Ms. OATES. With great respect, that was not mentioned in my 

guidance. I think your staff may be referring you to the OMB guidance. And I think those questions would be best directed to OMB. 

I had no conversation about that. 

Mr. BUCSHON. So, it is not-that is the other tactic is it is the 

other guy all the time. And you know—— 

Ms. OATES. Sir, I am sorry you feel that way. 

Mr. BUCSHON. Well, because we have this hearing after hearing. 

We just had it yesterday on an NLRB hearing. That it is not—you 

know where does the buck stop? You released the guidance. You 

were responsible. 

Ms. OATES. Sir, that wasn’t mentioned in the guidance released 

by the Department of Labor. 
61 

Mr. BUCSHON. Who also made the decision ultimately to release 

the guidance? Did you? I mean because somebody has—you get all 

these requests. And my time is expired, but—so I will just make 

a statement. 

You get all these requests to release the guidance that you say 

you have been requested. Who actually makes the decision to release the guidance? And if that is you then I think I respectfully 

ask you to submit the list of people who requested to be guided. 

Thank you. I yield back. 

Chairman WALBERG. Thank the gentleman whose time is expired. 

I now recognize the gentlelady from Ohio, Ms. Fudge. 

Ms. FUDGE. Thank you very much, Mr. Chairman. 

I have been sitting, listening to this. So what I would like to do 

is to get away from the spin that I am hearing from the other side, 

and get away from the politics and the political attacks on you, 

madam. So let’s go to the act itself. Let’s see if we can be clear. 

I want to start with my first question to Mr. Eisenbrey. You 

talked about—you gave us a quote from the language. Let me just 

see—let me give you a couple of other things I think that are important because I see no ambiguity, not like the other attorneys sitting here. I don’t see the ambiguity they see, and I too am an attorney, just for the record. 

The preamble to the act says that they want to condemn an 

overbroad notice. They say that they want to prevent unhelpful 

blanket notice. They talk about, as you so aptly quoted, the part 

about WARN notice, until a mass layoff is a probability rather than 

a mere possibility. 

So, the question is, just as a hypothetical or an example. In your 

opinion do you believe that sending pink slips to all the employees 

of a company, although only 10 percent will be laid off, meets the 

probability threshold of the WARN Act’s requirements? 

Mr. EISENBREY. Well, it might for the 10 percent who the companies knows are being laid off. But certainly that would be a terrible 

thing to do to the other 90 percent who are not being laid off. 

Ms. FUDGE. And it would be an overbroad application, would it 

not be? 

Mr. EISENBREY. It would. 

Ms. FUDGE. Assistant Secretary Oates—by the way I think that 

your position is a correct one. The actual impact of the sequester 

as we know is unknown. Even though we don’t want the sequester, 

Democrats are very much against the sequester, it in fact may happen, as we are not the majority of this House. 

As you know, the notice required by the WARN Act must include 

the name and location of the sites where the layoffs will take place, 

and the positions of the people who will be laid off. How would a 

company be able to comply with the WARN Act requirements given 

the uncertainty that the sequester poses? And how could a company provide the proper notification when it is unclear whether its 

contract will even be affected? 

Ms. OATES. That is exactly why we issued the guidance, congresswoman. We—as soon as a company has those specific elements, they are required—it triggers WARN notice. But until they 

have those specifics WARN is not applicable. 
62 

Ms. FUDGE. Thank you. Further, was it reasonably foreseeable 

that sequestration was going to occur on January 2, 2013? 

Ms. OATES. No, ma’am, it was not. 

Ms. FUDGE. Okay. Thank you. 

Mr. Notestine, you said in your testimony that it is highly questionable whether the Department of Labor has the authority to 

issue guidance in this matter. Why would you make such a statement, sir? 

Mr. NOTESTINE. Well, because—because they have authority to 

make statements such as they did. They do have authority to issue 

regulations. They did issue regulations some years ago. And those 

regulations are very clear I believe, specifically where it talks about 

notice in ambiguous situations. 

It says it is therefore prudent for employers to weigh the desirability of advance notice against the possibility of expensive and 

time consuming litigation to resolve disputes where notice has not 

been given. The department encourages employers to give notice in 

all circumstances. And then they come out with a statement in the 

TEGL which appears to me to be inconsistent with that. And that 

was my concern. 

Ms. FUDGE. I am questioning the fact that you say they do not 

have the authority to issue guidance. 

Mr. NOTESTINE. They don’t—I do not believe they have authority 

to issue something inconsistent with their regulations. 

Ms. FUDGE. But that is not what you said. I just want to be 

clear; they do in fact have the authority. 

Mr. NOTESTINE. They can issue TEGLs. There is no doubt about 

it. 

Ms. FUDGE. I just wanted to be clear. 

Thank you, Mr. Chairman. I yield back. 

Chairman WALBERG. I thank the gentlelady. I now recognize the 

chairman of the committee, Mr. Kline. 

Mr. KLINE. Thank you, Mr. Chairman. Thanks to the witnesses 

for being here. 

Secretary Oates, I have just learned today about the envelope 

that Chairman Walberg was talking about and I—it is just astonishing to me that after hours last night an envelope with a computer disk and a post-it note with a password was slid under the 

door. And I heard your response that that is not your doing. 

Would it be—could you guess that it would be the congressional 

liaison office who would have sent somebody over here to slide this 

under the door? Who—where would it have come from? 

Ms. OATES. My assumption, sir, is that it came from someone 

who works in OCIA. 

Mr. KLINE. So, I am just trying to imagine what that discussion 

was that said, gosh I think it would be a really good idea to take 

this disk, put a password on it and go over—let us go over to Congress and slide it under the door. I just would love to have heard 

that discussion. That is amazing. 

And I would like to know, following up to the chairman’s questions, if we can find out where that came from. I mean it is just 

sort of an envelope slid under the door; a very, very strange, I 

would opine, way of communicating with the Congress of the 

United States. And I have been—because it is not your disk, and 
63 

not your note, you wouldn’t know if there is any sensitive material, 

if that password was available for the people who are sort of cleaning the floor or—it is out of your scan. Is that correct? 

Ms. OATES. I wasn’t involved in that, sir—— 

Mr. KLINE. Okay. 

Ms. OATES [continuing]. That is correct. 

Mr. KLINE. All right. Let’s move onto something that you are involved with. 

Your testimony doesn’t address sequestration’s current effective 

date at the end of this month. Does your guidance and its analysis 

currently apply to sequestration? Or is that just a thing of the 

past? 

Ms. OATES. It would apply today, sir, but as we all know, as the 

ranking member mentioned, there was testimony yesterday. I have 

no idea when we will get guidance from OMB to begin sequestration plans or what conversations they are having with other people. 

But as of right now, yes, it does apply. And again, the most important thing is any employer who has this specific information should 

invoke the WARN when they have that information. 

So as employers are getting information from government agencies—that is why I want to be careful. I mean, I think that somebody could get the specific information they needed and they would 

have to invoke WARN sooner than March 1st or on March 1st. 

But my guidance would still apply. Until you have that level of 

specific information about the specific job titles that will be impacted by reductions it doesn’t impact WARN. 

Mr. KLINE. So then presumably OMB’s guidance, which is based 

on your guidance, is still applicable. Is that correct? 

Ms. OATES. The OMB guidance that they issued, I have no idea 

what their plans are on that, sir. 

Mr. KLINE. And so you haven’t talked to them about it at all? 

Ms. OATES. No, sir. 

Mr. KLINE. Dark hole. Okay. 

Thank you. I yield back. 

Chairman WALBERG. I thank the chairman. 

I recognize the gentleman from New Jersey, Mr. Andrews. 

Mr. ANDREWS. Thank you, Mr. Chairman. 

Dr. Furchtgott-Roth, did I pronounce your name correctly? 

Ms. FURCHTGOTT-ROTH. Yes. Yes, but I am not a doctor. 

Mr. ANDREWS. Oh, well—— 

Ms. FURCHTGOTT-ROTH. Ms. Furchtgott-Roth. 

Mr. ANDREWS. Okay. All right. 

You make a statement that ‘‘I am not privy to internal White 

House discussions, but it is likely that the White House asked contractors to break the law.’’ Do you have any personal knowledge of 

discussions between the Obama campaign and the White House 

about this notice issue? 

Ms. FURCHTGOTT-ROTH. No. That is why I said likely. 

Mr. ANDREWS. Okay. 

Ms. FURCHTGOTT-ROTH. I did not say it definitively. 

Mr. ANDREWS. Okay. Did you have any personal knowledge of 

discussions between the White House and any contractors about 

this issue of these notices? 
64 

Ms. FURCHTGOTT-ROTH. No. That is why I said likely, not definitively. 

Mr. ANDREWS. I think it is likely that your statement is motivated by political malice against the administration. Not being a 

fact, I didn’t say certainly; I said likely as well. 

I want to ask you a question. In a few days, March 1st, this sequester is about to take place and there are some estimates that 

it will cost us 750,000 jobs. As an economist, as a commentator on 

our economy, do you believe we should let the sequester stay in 

place or try to lift it? 

Ms. FURCHTGOTT-ROTH. I believe we should replace the sequester 

with more sensible packages of spending cuts. 

Mr. ANDREWS. And I agree with that actually. 

Ms. FURCHTGOTT-ROTH. That is good that we agree on something. 

Mr. ANDREWS. In part. No, we agree on many things. 

In part, Mr. Van Hollen, who is the senior Democrat on the 

budget committee has a proposal that would defer the sequester for 

a year and replace it with a combination of cuts and revenue increases. Now, I am not asking you if you support that proposal or 

not because I assume you have not read it. And if you did I am 

not going to ask you that question. Do you think that we should 

put that proposal up for a vote this week? 

Ms. FURCHTGOTT-ROTH. Well, I am not a member of Congress. 

There are many, many important things before Congress and I 

don’t know whether this—it is not up to me to say what should be 

on the congressional calendar. 

Mr. ANDREWS. I just want your opinion. What we are voting on 

today is a rule that will let us debate a bill tomorrow. The bill is 

to freeze the wages of federal employees for a certain period of 

time. 

We are leaving town tomorrow after that. We are not coming 

back for I believe 9 or 10 days. Just in your opinion as a citizen 

observer, do you think that we should come back next week and 

vote on a proposal that would delay the sequester? 

Ms. FURCHTGOTT-ROTH. No. I think that spending needs to be 

cut, not the cuts in the sequester, but a more sensible spending 

package. And you should vote on that. In fact you have already 

passed it twice. 

Mr. ANDREWS. Well, we have not passed it twice. The—do you 

think that we should come back and consider your proposal, and 

Mr. Van Hollen’s and others’ next week? Or that we should take 

a recess? What do you think is the more responsible course? 

Ms. FURCHTGOTT-ROTH. I think it would be responsible to vote in 

place other spending cuts, even greater spending cuts because federal spending as a percent of GDP has grown from 20 percent to 

24 percent. 

Mr. ANDREWS. Okay. Irrespective of which plan you want to follow, that is not what I am asking you. The current plan of the 

House leadership is to leave town on Friday and go God knows 

where next week and do whatever. I am asking you if you think 

it is a more reasonable proposal to reconvene next week and let different members put up their plans as to what to do. 
65 

I told you Mr. Van Hollen’s proposal. You have a different thing 

that you would like to do. Don’t you think we should come back 

next week and do that? 

Ms. FURCHTGOTT-ROTH. There have been two bills that were already passed in the House that would transform the sequester 

spending cuts into a more sensible package of cuts. And I think the 

Senate should consider those. And perhaps the president should 

consider signing those into law. And I gave the example of the 

biofuels required by the Defense Department at $27 a gallon when 

they could be paying $3.50 in diesel fuels. 

Mr. ANDREWS. And you know what? Your idea may or may not 

have merit. But I don’t think there is any merit to taking a 9-day 

vacation when there is 750,000 layoffs looming. Now you and I 

have different views how to solve this problem—— 

Ms. FURCHTGOTT-ROTH. You should tell Speaker John Boehner. 

Mr. ANDREWS. Excuse me. Well, maybe you should. You probably 

talk to him more often than I do. 

Ms. FURCHTGOTT-ROTH. I haven’t—— 

Mr. ANDREWS. We have said to Speaker Boehner, who is a friend 

who used to chair this committee that we think we should stay 

here next week and put proposals on the floor and try to pass 

something that the Senate would take up and move on. Don’t you 

think we should do that? 

Ms. FURCHTGOTT-ROTH. I don’t have any opinion on what the 

congressional calendar should be. But I do think that spending cuts 

need to be passed. But I don’t know how. I mean why don’t you 

pass them—— 

Mr. ANDREWS. Excuse me. It is my time. 

You must think that the Congress should try to pass some law 

that would defer 750,000 layoffs. Don’t you think that? 

Ms. FURCHTGOTT-ROTH. I think perhaps you should do it today 

or tomorrow and then go on the 9-day recess. 

Mr. ANDREWS. I agree. So I will ask unanimous consent on the 

floor today, with your blessing, to take up Mr. Van Hollen’s proposal and put it to a vote. Would you support that? 

Ms. FURCHTGOTT-ROTH. I don’t support Mr. Van Hollen’s proposal. 

Mr. ANDREWS. But would you support taking a vote on it because 

it is a way out of this problem? 

Ms. FURCHTGOTT-ROTH. Since the vote isn’t going to pass I 

wouldn’t support it. 

Mr. ANDREWS. You only support things that will pass. 

Ms. FURCHTGOTT-ROTH. I think it is time—— 

Mr. ANDREWS. You don’t support the House plan because it will 

not pass the Senate. 

Ms. FURCHTGOTT-ROTH. I think it is time to take a realistic view. 

Spending growth in the federal government is extremely serious. It 

is gone from 20 percent of GDP in 2007 to 24 percent this year. 

Mr. ANDREWS. I think it is likely that you have made an unsubstantiated allegation for political reasons. 

I yield back the rest of my time. 

Chairman WALBERG. The gentleman’s time is expired. Thank 

you. 
66 

I now recognize the ranking member, Mr. Courtney, for closing 

comments. And I thank the panel for your testimony today. 

Mr. COURTNEY. And likewise. Thank you for your appearance 

here today and your words. 

You know I just want to end with what I thought was one of the 

most powerful statements yesterday at the Armed Services Committee. Admiral Jonathan Greenert, who is the chief naval officer, 

runs the U.S. Navy, said to the Armed Services Committee, there 

is still time. 

I mean the fact of the matter is, and we saw this on January 1st, 

that literally while people were home watching football the House 

took up a bill that, again, avoided the fiscal cliff and enacted a 2- 

month delay of sequestration, and used again a combination of revenue and spending cuts to avoid that from hitting. 

And the admiral is totally right on the law that you know we can 

do this today if we wanted to if we could get people to agree. And 

we can certainly do it on February 28th or on March 1st itself or 

even on March 2nd because again it is not going to all end on one 

day. 

And that really should be, in my opinion, the takeaway for all 

of us as members of Congress and as Americans that, you know, 

in terms of the people who are out there defending our country, the 

people who are out there keeping the airports safe and planes landing on time, the people who protect the homeland, the people who 

educate our children, the people who care for seniors, they deserve 

better than to have, again, a Congress not in session next week 

and not dealing with this—the gravity of this issue. 

And again, the law does not require a super committee to have 

to do it. The fact of the matter is that two sides can negotiate and 

fix this dilemma, that would be a completely self-inflicted damage 

to the economy, as Mr. Eisenbrey, again, testified. And as the Bipartisan Policy Center they actually had a higher estimate. They 

said it would be a million lost jobs if sequestration were allowed 

to fully implement. 

So you know hopefully that will be our takeaway here today as 

well. And you know that, I think again, is the mission that we have 

before us. 

I think the Department of Labor scrupulously followed the law 

in terms of a request, a legitimate request that came in from people who work hard out there to implement programs that help 

workers and families deal with mass layoffs. And again, I think 

events proved your judgment was in fact the correct one. 

Again, Mr. Chairman, I want to thank you for my maiden hearing, your gracious manner in terms of handling it. And with that 

I would yield back. 

Chairman WALBERG. I thank the gentleman. And I concur that 

this has been an important hearing, made even more important by 

this request for information that should have been forthcoming a 

long time ago. And the fact that it was slipped under the door at 

9:00 last night with a password on a sticky note concerns me greatly. 

But more than that, in testimony today, to hear that in a small, 

small department that information that should have been known 
67 

that was going to be asked today. There is still a lot of gaps in understanding, why, when, what for? 

Sequestration is a huge thing, as has been mentioned on both 

sides of the aisle. I concur with the fact that the whole idea of sequestration was that it would never happen. 

It would be the last-ditch resort because it is a terrible process 

to undergo. And I would state for the record that this subcommittee and I believe the full committee will pay very close attention, very close attention to employees’ protections and rights as 

well as employers’ protections and rights. 

That is our responsibility. And we will be held accountable for 

that. Not simply by our electorate, but by the future of our nation 

and the outcome of our nation that is based upon employers and 

employees working together in safe environment, in as secure an 

environment as possible, and growing this great economy which is 

called the United States of America. And I commit you, my ranking 

member and members of the other side of the aisle as well, that 

that will be a purpose here. 

We may differ at times on how much we consider it is being carried out. But we will make that a purpose. And we will make it 

a purpose over politics. And I think that was our concern when we 

initially drafted the letter and sent it for information that I hope 

has been finally supplied to us. 

It was to get beyond politics and to say there is a sequestration 

date certain. We have changed that. But at that time it was certain. It has impact, potentially on thousands of lives, let alone our 

economy. 

There is a law that is in place that we have one of the drafters 

in the room today, thankfully. And there is a purpose for that. And 

I think this—the gravity of this situation with sequestration has 

been far stronger than any other time before. And we deserve answers. 

This subcommittee is responsible for oversight. We will do oversight, as well as dealing with issues and policy. But to make sure 

that our citizens are well served, we will do oversight so that the 

Departments of State as well as the members of Congress who represent our nation’s citizens will be teammates together as best possible, outside of politics. And this function will produce good impact. 

We will undertake looking at these 400 pages. And on the basis 

of what we find out I guess we will decide where we go from here. 

But I am disappointed that it took a committee hearing to be called 

for us to get that. And so now it comes to our responsibility of seeing how we make the process work more fully and completely on 

behalf of our workers and our employees and our nation for the future. 

And with that I close my—oh. One thing, thank you for reminding me, I get emotionally involved and I forget. 

Also, I think we need to go back to a point that was made and 

carried on in several ways with statements that were made by specifically one of our witnesses. But it is not unique, even in the fact 

that ABC News, Mary Bruce and Jake Tapper reported in an article they wrote October 1, 2012, ‘‘At White House Request Lockheed 

Martin Drops Plan to Issue Layoff Notices.’’ 
68 

The opening sentence says ‘‘Defense contractor Lockheed Martin 

heeded a request,’’ so at least the perception was there, ‘‘heeded a 

request from the White House today, one with political overtones, 

and announced it will not issue layoff notices to thousands of employees, just days before the November presidential election.’’ That 

is concerning to me. And I would request that this be submitted as 

part of the record without objection. 

[The information follows:] 

[From go.com, Oct. 1, 2012] 

At White House Request, Lockheed Martin 

Drops Plan to Issue Layoff Notices 

By MARY BRUCE and JAKE TAPPER

Defense contractor Lockheed Martin heeded a request from the White House 

today—one with political overtones—and announced it will not issue layoff notices 

to thousands of employees just days before the November presidential election. 

Lockheed, one of the biggest employers in the key battleground state of Virginia, 

previously warned it would have to issue notices to employees, required by law, due 

to looming defense cuts set to begin to take effect after Jan. 2 because of the failure 

of the Joint Select Committee on Deficit Reduction—the so-called Super-committee, 

which was created to find a way to cut $1.5 trillion from the federal deficit over the 

next decade. 

Such massive layoffs could have threatened Obama’s standing in the state he won 

in 2008 and is hoping to carry again this November. 

On Friday, the Obama administration reiterated that federal contractors should 

not issue notices to workers based on ‘‘uncertainty’’ over the pending $500 billion 

reduction in Pentagon spending that will occur unless lawmakers can agree on a 

solution to the budget impasse, negotiations over which will almost definitely not 

begin until after the election. 

Contractors had been planning to send out notices because of the WARN Act— 

Worker Adjustment and Retraining Notification Act—which according to the Department of Labor requires ‘‘most employers with 100 or more employees to provide 

notification 60 calendar days in advance of plant closings and mass layoffs.’’ 

In a statement Friday, GOP Senators John McCain, Lindsey Graham and Kelly 

Ayotte accused Obama of putting ‘‘his own reelection ahead of the interests of working Americans and our national security by promising government contractors that 

their salary and liability costs will be covered at taxpayer expense if they do not 

follow the law that requires advance warning to employees of jobs that may be lost 

due to sequestration. * * * Apparently, President Obama puts politics ahead of 

American workers by denying them adequate time to plan their finances and take 

care of their families. The people who work in the defense industry and other government contracting companies deserve as much notice as possible that they are on 

track to lose their jobs.’’ 

In July the Labor Department issued legal guidance making clear that federal 

contractors are not required to provide layoff notices 60 days in advance of the potential Jan. 2 sequestration order, and that doing so would be inconsistent with the 

purpose of the WARN Act. 

In Friday’s memo, the Office of Management and Budget reiterated that notice, 

urging agencies’ contracting officials and CFOs to ‘‘minimize the potential for waste 

and disruption associated with the issuance of unwarranted layoff notices.’’ 

The guidance issued Friday told contractors that if the automatic cuts happen and 

contractors lay off employees the government will cover certain liability and litigation costs in the event the contractor is later sued because it hadn’t provided adequate legal warning to its employees, but only if the contractor abides by the administration’s notice and refrains from warning employees now. 

After ‘‘careful review’’ Lockheed announced today that it will abide by the administration’s guidance. 

‘‘We will not issue sequestration-related WARN notices this year,’’ Lockheed announced in a written statement. 

‘‘The additional guidance offered important new information about the potential 

timing of DOD actions under sequestration, indicating that DOD anticipates no contract actions on or about 2 January, 2013, and that any action to adjust funding 

levels on contracts as a result of sequestration would likely not occur for several 

months after 2 Jan. The additional guidance further ensures that, if contract actions 

due to sequestration were to occur, our employees would be provided the protection 
69 

of the WARN Act and that the costs of this protection would be allowable and recoverable. 

‘‘We remain firm in our conviction that the automatic and across-the-board budget 

reductions under sequestration are ineffective and inefficient public policy that will 

weaken our civil government operations, damage our national security, and adversely impact our industry. We will continue to work with leaders in our government to stop sequestration and find more thoughtful, balanced, and effective solutions to our nation’s challenges,’’ Lockheed said. 

Chairman WALBERG. Hearing no objection, it will be part of our 

record. 

Having said that, there being no further business, the committee 

stands adjourned. 

[Whereupon, at 11:34 a.m., the subcommittee was adjourned.] 

Æ