The law states simply that if private defence firms are going to lay off their employees, they must give those employees at least 60 days notice.But the automatic defence cuts associated with the fiscal cliff, and the notifications that would be required if defence firms plan to lay off employees, has created an election concern for the Obama administration.
So, the administration has decided to offer to bankroll the legal fees that these companies may incur if they opt not to notify employees 60 days prior to the layoffs, as the law stipulates.
The government’s guarantee to foot the bill for legal problems, as long as contractors heed OMB’s advice to refrain from warning about lob losses, is unusual. “I don’t know of any situation where the government has done this in the past,” said William Gould, a labour professor at Stanford Law School.
“Presumably the purpose of the law is not to create legal fees,” writes McArdle. “If the Obama administration does not think that employees should have notice of these potential dangers, then it should say so forthrightly.”
McArdle also smartly asks why are U.S. citizens, via tax dollars, expected to foot this legal bill?
This adminstration action may be a response to John McCain recently releasing letters from the defence firms stating their intent to send out layoff notices. The Obama administration is worried that the firms will send these notices just days prior to the election, causing many undecided voters to vote for Romney.
The administration argues that the law is in a grey area because “sequestration” — the automatic cuts set in place by Congress — is not necessarily a foregone conclusion. Indeed, many on Capitol Hill believe the ‘across-the-board’ cuts will be averted in favour of more surgical ones.
NOW WATCH: Briefing videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.