According to Jeremy Herb’s report, the Office of Management and Budget issued guidance Friday saying the government would cover severance costs mandated under the Worker Adjustment and Retraining Notification Act if contracts are canceled.
That practice also applies if contractors did not issue layoff notices, OMB said.
Several other large defense contractors have said they are not planning to send any notices related to sequestration, according to Herb’s article.
Under WARN, companies are required to give employees 60 days notice of layoffs, while California and New York have their own laws requiring 90 days advance notice.
OMB said that if plant closings or mass layoffs occur under sequestration, the contracting federal agency would be responsible for employee compensation costs for WARN act liability as determined in a court, Herb reports.