Sen. Lindsey Graham (R-S.C.) says that he will do anything he can to block the Obama administration from reimbursing defense contractors for severance costs if the firms don’t send layoff notices to employees.
The Obama administration issued guidance Friday that said defense firms’ costs would be covered if they have to layoff workers due to canceled contracts under the across-the-board cuts set to take effect Jan. 2.
The layoff notices have become a politically charged issue because they could have come just four days ahead of the election because of a 60-day notice required by federal law for mass layoffs.
Graham and other Republicans were livid after the Obama administration issued the guidance on Friday telling contractors that their legal costs would be covered due to canceled contracts under sequestration, but only if they did not issue layoff notices before sequestration occurs – and before the November election.
“I will do everything in my power to make sure not one taxpayer dollar is spent reimbursing companies for failure to comply with WARN Act,” Graham told The Hill in a phone interview Monday. “That is so beyond the pale – I think it’s patently illegal.”
The guidance prompted Lockheed Martin – which had previously threatened to send out notices of potential layoffs to all of its 123,000 employees – to say Monday it would not send notices this year under the Worker Adjustment and Retraining Notification (WARN) Act.
House Armed Services Chairman Buck McKeon (R-Calif.) called the administration’s guidance “politically motivated memos with dubious grounding in the law.”
“It appears companies will bow to the threat implicit in last week’s OMB guidance; withhold notices today or the government might not cover your court costs down the road. Let me be clear, neither the OMB guidance nor the Lockheed decision will protect a single defense industry job if sequestration occurs in January,” McKeon said in a statement.
Graham has been one of the biggest advocates of companies issuing the layoff notices. He said in July that they should issue them immediately to raise public concern and force Congress to find a solution to avert the sequestration cuts.
Graham said Monday he was “very surprised” that Lockheed decided not to issue the notices, which could have come as early as Wednesday in states with a 90-day notice requirement.
“This is a complete turnaround,” Graham said. “This reeks of politics, and quite frankly the legally reasoning being pushed by OMB makes no sense for me.”
Democrats argue that the contractors’ threats to issue mass layoff notices just ahead of the election was a political move.
When the Labor Department issued guidance in July saying it was “inappropriate” to issue the WARN Act notices due to sequestration, House Armed Services ranking member Adam Smith (D-Wash.) said: “There is no reason to needlessly alarm hundreds of thousands of workers when there is no way to know what will happen with sequestration.”