The Fiscal Cliff and the WARN Act


Federal spending cuts as a result of the looming fiscal cliff may have an additional impact on federal contractors anticipating layoffs or plant closures. Employers with 100 or more employees are required to provide their employees with a 60 day notice prior to a mass layoff or plant closing under the Worker Adjustment and Retraining Notification (WARN) Act.
Failure to comply with the WARN Act results in potential fines and liability to each affected employee. Additional fines and liability may also be incurred in states that have adopted their own versions of the WARN Act.
One of the results of the fiscal cliff is the sequestration of federal funds, in other words, a reduction in federal spending. In July, the Department of Labor (DOL) issued a memorandum assuring that notice is not required for federal contractors in anticipation of the fiscal cliff because it qualifies as an "unforeseeable business circumstance," an exception to the WARN Act. The DOL memorandum can be accessed here. The White House Office of Management and Budget (OMB) also issued a memorandum in September, assuring federal contractors that they were not required to provide WARN notices for potential layoffs resulting from the sequestration of federal funds. The OMB also stated that, provided that the employer otherwise complied with DOL regulations, federal agencies would cover potential liability under the WARN Act, should any arise. The OMB letter can be accessed here.
While these assurances should provide some solace to federal contractors, their legal effect is unknown. The degree to which these memorandums are binding is unclear as is the government’s ability to indemnify private employers. Further, employers in states with their own WARN acts should take particular warning as the effect of the federal issued guidance is even less certain.
For further information about the WARN Act, please contact Bill Trumpeter, Jennifer Terry or any member of our Labor & Employment Law Practice Group.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Miller & Martin PLLC | Attorney Advertising

Written by:


Miller & Martin PLLC on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:

Sign up to create your digest using LinkedIn*

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.

Already signed up? Log in here

*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.