The Obama administration has put a number of companies in a dilemma. Let’s see what you would do. Here are the facts:
1. There is an employment law, called the WARN Act (see full description of employer mandates here), that requires companies of a certain size to notify its employees 60 days before a planned mass layoff. It is supposed to give the employees time to seek new jobs and/or retraining. It is enforced by allowing employees to sue the company in case of violation. The penalty an employer faces for failing to comply with this law can be significant.
2. Defense contractors are staring into the face of “sequestration” at the end of this calendar year. If you recall, when the “Super-Committee” of Congress could not decide how to cut spending (surprise!), automatic cuts were scheduled to take effect. The biggest of these scheduled cuts is going to hit the Defense Department.
3. Knowing the likelihood of sequestration full well ahead of time, defense contractors must plan for mass layoffs, because after the beginning of 2013, the DoD will not be able to maintain payments on many of its contracts. 60 days ahead of January 1, 2013 is a date just before the national election on November 6, 2012.
So, given the facts you see that defense contractors must tell their employees just before the national election that they are likely to be laid off—as it stands now, Congress will not act before the elections to change this, and maybe there will never be a change. Some contractors have already told the press they plan to comply with the law.
But, if many major companies announce layoffs just before the election, it will make the Obama administration look bad. So…
The Obama administration has issued guidelines telling companies that if companies do not comply with the law, the “government will pay” their legal costs to defend any lawsuits brought against them, and the “government will pay” any court-ordered employee compensation costs. The “government will pay” is of course a euphemism which means “taxpayers will be coerced to pay.” (See this article and the guidance letter itself.) If anyone doubts the political nature of this guidance you need only consider that the letter justifies it by saying, “giving notice in these circumstances would waste States’ resources in undertaking employment assistance activities where none are needed.” Given all the things the government wastes resources on, absolutely no one would believe employee assistance activities of the nature contemplated by WARN are a waste.
So what would you do in this situation? Let me rephrase that: If you are a defense contractor with more than 100 employees, what are you going to do?
Let me suggest that you follow the law for several reasons.
First, the Obama administration “guidance” is probably illegal. You are always responsible for following the law, not even the President can tell you not to. In this case, the administration might be found guilty of using taxpayer money for political gain. You can’t get good legal advice from a felon who says he’s a lawyer, even if he’s the President.
Second, you are always responsible for following the law, the President can tell you that he will not enforce the law or that he will pay for your legal fees and fines—although those actions are probably unconstitutional of course—so you might not have to pay for your guilty verdict. But you will still be a law-breaker! And don’t think that following guidance from a clearly politically-motivated department of the White House will save you from future reprisals by union thugs and capitalist-hating sociopaths.
Third, what happens if Obama is not reelected? If Obama’s administration is not in office, will the next administration abide by the deal? Doubtful, since as I said, Obama’s “guidance” on this is probably an unconstitutional abuse of power. These lawsuits by employees will drag out for months or even years. There will be tremendous pressure, no matter who is in the White House, to make you pay.
A good rule of behavior is always to follow the law. Don’t let anyone, not even the President of the United States tell you not to. Remember that war criminals have been convicted for following “guidance” from their dictator.