Violating the WARN Act
Why is the White House urging federal contractors to break the law?

Lockheed Martin CEO Robert Stevens


Hans A. von Spakovsky

The government’s summer guidance letter specified that in order to avoid any “anxiety” on the part of employees, notices must not be “overbroad.” In other words, there must be “specific contract terminations” by the government before layoff notices can be deemed “consistent with the WARN Act.” However, the regulations cited in the summer guidance actually state that these notices must be issued to employees “who may reasonably be expected to experience an employment loss” [emphasis added] and that even if “the employer cannot identify the employee who may reasonably be expected to experience an employment loss . . . the employer must provide notice.”

The summer guidance also instructed defense contractors that they would be exempted from the 60-day notice requirement because the jobs they will axe cannot yet be known. Although the guidance refers in part to the regulation’s definition of “reasonably foreseeable,” that interpretation does not stand up to scrutiny. As it turns out, contractors such as Lockheed didn’t think so either. According to the regulations, the circumstances that make such mass layoffs “foreseeable” are determined in part by the “employer’s business judgment,” of the kind that a “similarly situated employer” would make. Moreover, what is “reasonably foreseeable” does not include “accurately predicting general economic conditions.” The fact that billions of dollars in impending defense-spending cuts would lead to layoffs is certainly “reasonably foreseeable,” a conclusion Lockheed and other employers reached. Further, making such a cause-and-effect analysis is not tantamount to divining general economic conditions in the future, so that exemption also does not apply.

Those clear and unambiguous regulations explain Lockheed’s reluctance to follow the government’s initial guidance letter that urged the company not to issue the required WARN Act notices. It also explains why Lockheed and the other contractors needed an additional taxpayer-funded guarantee from the White House: The administration wished to counter their fears of massive litigation costs.

One may wonder why the White House has decided to dramatically change its interpretation of the WARN Act now. It appears that the layoffs, which are likely to occur in the wrong places (key battleground states) at the wrong time (days before an election), have prompted this change. Whatever the reason, the administration has issued an interpretation of the WARN Act that is contrary to the law. And it has told contractors that if a court finds that they violated the WARN Act, then the American taxpayers will pay all “WARN Act liability as determined by a court, as well as attorneys’ fees and other litigation costs (irrespective of litigation outcome).”

This is the ultimate abuse of the president’s executive authority: inducing federal contractors to violate federal law in order to protect the president’s reelection, and promising taxpayer funds to pay for any liability that comes from breaking the law.

— Hans A. von Spakovsky, a former Justice Department official and former member of the Federal Election Commission, is a senior legal fellow at the Heritage Foundation.