Congress has agreed to massive defense spending cuts under "sequestration" which will take place on January 2, 2013. Defense contractors affected by the budget cuts would be required by the WARN Act to issue notice letters to employees by November 2 (which is four days before the November 6 election). The penalty for employers who violate the WARN Act is that they become liable to their layed-off employees for "back pay for each day of a violation" and for "benefits under an employee benefit plan," plus a penalty of $500 for each day that the notice was not sent to the local government where the layoffs will occur. Obama was a big supporter of the WARN Act when he was in the U.S. Senate. In 2007, he said, "It adds insult to injury to close a plant without warning employees."
This is a big deal and an expensive process. For example, Lockheed CEO Bob Stevens has said that 123,000 of his employees would receive layoff notices. EADS, Northrop Grumman and others could do the same. Many defense contractors are based in the so-called swing states, such as Virginia, Ohio and Florida. Obama was a big supporter of the WARN Act when he was in the U.S. Senate.
When the Obama Administration realized that the layoff letters would reach workers' mailboxes just four days before the November 6 election, the Obama Administration issued a "guidance" to encourage employers to violate the WARN Act. The Administration announced it is encouraging employers to violate the Act and promised to use taxpayer money to cover fines incurred from their unlawful actions.
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