The Office of Management and Budget Friday reinforced a Labor Department ruling that federal contractors need not issue notices of impending layoffs to employees related to the looming budget sequester. OMB said agencies would cover contractors’ “liability and litigation costs” related to such notices if they follow Labor’s guidelines.

In a memo to senior finance and procurement officials at agencies, Danny Werfel, OMB’s controller, and Joseph Jordan, head of the Office of Federal Procurement Policy, expanded on guidance provided by Labor in July about layoff notices.

In that guidance, Labor officials said contractors should not send warnings of impending layoff notices to their employees in advance of a potential budget sequester in January. Such notices, they said, are not required under the 1988 Worker Adjustment Retraining Notification Act, and in fact are “inconsistent” with the law, according to a policy letter to state workforce agencies issued by Labor officials.

Contractors have expressed concern that the WARN Act, which requires companies to provide 60-day notice to employees of impending mass layoffs, might apply to a budget sequester that could slash federal agencies’ budgets. Labor’s Employment and Training Administration said it does not, largely because it is not clear yet — and may not be clear until the last minute — whether a sequester actually will go into effect.

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