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Committee Demands Information on OMB's WARN Act Guidance


Dear Acting Director Zients:

We are greatly concerned about the Office of Management and Budget’s (OMB) September 28, 2012 guidance regarding “Allowable Contracting Costs Associated with the Worker Adjustment and Retraining Notification (WARN) Act.”Specifically, we are concerned by OMB’s reliance on the Department of Labor’s (DOL) July 30, 2012 misleading and incomplete guidance relating to the applicability of the WARN Act to potential sequestration-caused layoffs.  To better understand the OMB guidance and its relationship to the DOL guidance, we respectfully request information, documents, and communications, as delineated below.

As you know, the WARN Act generally requires employers with at least 100 employees to give affected workers 60 days’ notice of plant closings or mass layoffs. The DOL guidance concluded, given the “lack of certainty” about sequestration and its implementation, contractors are not required to issue WARN Act notices in advance of sequestration, and it would be inappropriate and inconsistent with the law for contractors to issue notices.  The OMB guidance provides that “if sequestration occurs” and an affected contractor subject to the WARN Act “followed a course of action consistent with [the] DOL guidance,” the contractor would be “covered” by the contracting agency.  Specifically, the agency would “cover” the contractor for resulting WARN Act-related employee compensation costs (“as determined by a court”), litigation costs, attorneys’ fees, and other unspecified, but “allowable” costs.

On August 2, 2012, we contacted DOL to share our concern that the DOL guidance is misleading and incomplete with respect to contractors’ obligations under the WARN Act and DOL’s role in enforcing the law. Despite subsequent requests for production, DOL has not answered our concerns or provided substantive responsive materials.Compounding our unanswered concerns, the OMB guidance attempts to incentivize contractors—with taxpayer dollars—to follow the DOL guidance and not issue WARN Act notices in advance of sequestration.

To read the full letter, click here.

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