The Corner

WARN: Billions for Bailouts

If you like taxpayer-funded billion-dollar bailouts, you’ll love the Obama administration’s evisceration of the WARN Act as applied to federal contractors who may be forced to make sequester-related mass layoffs.

As Hans von Spakovsky notes on the home page, the WARN Act requires employers to provide 60-days notice of mass layoffs or plant closings. The notice must go not just to the affected employees, but to their collective-bargaining representatives (if any), the chief elected officials of the political subdivisions in which the layoffs are to occur, and the state agencies responsible for handling mass employment losses.

As Hans states, the administration has told federal contractors who fail to issue 60-day WARN notices “that if a court finds that they violated the WARN Act, the American taxpayer will pay ‘all WARN Act liability as determined by a court, as well as attorneys’ fees and other litigation costs.’”

In addition to other adjectives that come to mind, this is unprecedented.

It will also be expensive. Remedies for WARN violations include 60 days of back pay and benefits, attorneys fees, and civil penalties of $500 per day of violation. Although unlikely, at least one court has awarded punitive damages.

These remedies do not affect employees’ rights under their collective-bargaining agreements or state laws. That’s important. Nearly half of all states have WARN analogs — and in some of those states the analogs contain no provisions offsetting the amounts paid under the federal WARN Act. Will the Obama administration insure employers against non-federal liabilities as well?

Given that hundreds of thousands of employees may be affected, taxpayers could be on the hook for billions.


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