No, the argument is quite simple. You rely on the precedent that exempts companies that will become insolvent in 60 days unless they can talk their creditors into forbearing a few payments. It is not legally relevant that in one case we’re talking about a change in legislation and in the other case about a change in a private lender’s position – in both cases the outcome turns on the scope of a reasonable business prediction. And here, you have the additional element of uncertainty that I was discussing above.
Well, as you know, that’s a very different question. My position is that the law is not open-and-shut here, and so the claim that this is clearly compelled by the law is suspect.
Whether it nevertheless makes sense as a prudent business decision in light of the uncertainty in the law depends on the costs of sending the notices. Among the many things that distinguishes this scenario from the typical WARN Act case, everybody including the workers knows about the circumstances underlying the notices. The notices are an empty formality here, so it may not have any business consequences to send them out. And since doing so probably inures to the company’s political benefit (the very motivation being questioned here), I imagine it’s a no-brainer as a business decision.
By the way, it isn’t just the greedy defense industry, what with their penchant for lighting cigars with $100 bills, that is trying to blackmail Washington into balancing the budget.
Leon Panetta, Obama’s own Defense Secretary, is trying to pull one over on the Federal government.
But it isn’t just defense that’s going to have job losses. A non-partisan report shows that domestic agencies will be “impossible” to run efficiently under a sequester:
Those non-partisan bastards! How dare they threaten our border security by telling the American people what will happen if there’s a budget armageddon!
Does the WARN Act compel notices to go out exactly 60 days in advance, or could they go out earlier? If they can go out earlier, does it suggest political motivation to threaten to send them out on Nov. 2?
Assuming the law does not change, how much certainty is there that a given employee receiving a notice would actually be laid off? Are we talking 80%+ certain? Because I suppose if that end of the calculation is so certain, then the only wiggle room is on reasonable predictions about Congressional (in)action.
(And just in case any of the above rhetoric is directed at me, please don’t take me to be arguing that this is somehow political extortion. I think it’s probably a mix of prudent legal caution and clever politics. Nothing untoward about it, for the reasons you highlight – namely, that failing to change the law will be bad. I just don’t think issuing WARN Act notices in the days before the election is a move clearly compelled by the law.)
I don’t want those donks with their puffed-up jargon-filled resumes competing for non-defense jobs. Some of us made a conscious decision to not work for defense and carefully build our careers in civilian areas. These guys will come in and take up space, the whole time wishing they could get back to their remote control brown people annihilation roles instead of doing that pansy do-gooder skirt work.
i’m not sure I’m seeing a distinction, though. Clever lawyers like yourself can argue about wiggle room in almost any law, so how is this situation unique? But if 90% of the legal counsels would advise their clients to issue the warnings, then it might as well be that the law compels action. Saying that a company is always free to risk a lawsuit they most likely will lose isn’t much of an out. If the effect of the law is that most companies will feel compelled to act as a wise business decision, then the law might as well compel them act, period.
Sometimes the law compels actions, and sometimes we aren’t sure what the law compels so we take into account business judgment and other factors. In one case, you can blame the law. In the other less so.
There’s a simple test to tell the difference: would the businesses have done the same thing if the decision to issue the notices was politically damaging? Or if it harmed their business interests?
Maybe they would in this counterfactual. If so, then you’re right that there’s no distinction at all. But if the answer is uncertain, or no, then the distinction matters.
I found a 2-week old article on Politico discussing more of the potential effects on sequestration.
The sequestration cuts are the “planned cuts” mentioned above. There are also defense reductions slated for 2012 related to the new “one war” policy, which are outside the sequestration itself.
I don’t think so. The 2012 budget was approved six months ago. There are no new reductions to this year’s budget; and has been stated, sequestration would occur next year.
An employer that has been through an announced layoff, or done any research on same will avoid it if possible. Productivity drops between the announcement and the layoff are huge: 50% or more IM(limited)E. It will be a huge blow to the economy as well. NONE of the workers that receive a “layoffs coming” notice will spend one damned discretionary cent until after they know they still have a job or not.
My point was that the George Mason study (from 2011) lumped both reductions together to get the 1 million job losses. If I’m reading it correctly, only about half of thoses then could be plausibly caused by just the sequestration.
Here’s an interesting update: the Labor Department has examined the WARN Act and the potential for these defense cuts, and found that issuing layoff notices shortly before the election would actually be an abuse of the law, because the notices would be impermissably “overbroad.” News at 11.
Since I thought the defense industry had no choice in the matter, I will have to eat some crow, man.
There is absolutely nothing wrong with what the defense contractors are doing. If they have to do layoffs and wait until after the election, wouldn’t that effectively be contributing to the President’s campaign?
This reminds me of the Medicare Advantage cuts, moved to January from October. The administration is manipulating scheduled budget cuts to have them fall after the election.
The guidance issued basically tells companies they don’t have to comply with the law. But as the link shows, they may still face liabiliy if they do indeed have to lay people off in january but didn’t give notice in November.
Actually, in today’s global operations, yes these contractors are being very vocal about this. Just look at the employment history of companies like IBM and Walmart. They “lay off” thousands of people that would trigger these notices, but avoid actually having to give notice because they claim to be “right sourcing” the jobs to off shore locations. So, for most of these contractors (e.g. IBM, CSC, etc), there is no reason that they have to give any sort of notice and they are well versed in how to downsize without laying off.
One example, IBM after having moved about 20k jobs off shore, told a massive number of employees that in order to keep their jobs, they had to move to an alternate location at a lower wage and with no moving expenses from the company. This caused nearly 20k to “quit their jobs” because they were unwilling to move.
Even the US government uses this tactic to downsize without laying off. I personally saw one agency move all their GS14s to the opposite side of the country in the middle of the school year. Nearly 75% quit as a result.
The Medicare Advantage cuts were moved to January. They were in October. But the President realized there was an October Surprise coming up that would cost him the election, so he contributed $8 billion of taxpayer money to his own campaign by unilaterally moving the cuts.
