WASHINGTON (Reuters) - The White House got some good news on Monday when Lockheed Martin said it would not issue notices of possible job reductions before the November 6 election.
With numerous defense industry jobs on the line in critical states including Virginia, a wave of job cuts could embarrass Democratic President Barack Obama’s administration.
Lockheed’s announcement followed assurances from the U.S. government that employers will not have to warn workers they could lose their jobs due to delays or terminations of contracts under automatic federal budget cuts set to come into force in January.
Some companies, particularly in the defense industry, have threatened to send out notices, which corporate officials have acknowledged is a way of pressuring both Congress and the White House before the election.
By law, companies with at least 100 employees must provide written warnings to workers 60 days in advance of plant closings or mass layoffs, if they are reasonably foreseeable.
That time frame meant employers might have to warn workers of layoffs as a result of planned spending cuts on November 2 - just days before the election, which many expect to hinge on the U.S. unemployment rate, the budget and the economy.
The Labor Department told defense contractors in July they would not have to issue the notices. Then, last week the White House Office of Management and Budget reiterated the guidance. A letter from the Defense Department, as well, appeared to calm the concerns of Lockheed, a leading Pentagon contractor.
Even if lawmakers fail to reach a deal sidestepping the automatic spending cuts, there would be no contract actions on January 2 and funding would probably not be adjusted for several months after that, said Jennifer Allen, a Lockheed Martin spokeswoman.
A Lockheed statement also said the company was assured any costs incurred by contractors who failed to warn employees would be “allowable and recoverable” from the government.
Because Congress and the Obama administration could not agree to a deficit-reduction plan last year, government funding is due to be cut by $109 billion across-the-board. Democrats and Republicans blaming the other for the automatic austerity that would bite deeply into defense and non-defense programs, and many say, could push the economy back into recession.
Reporting By Mark Felsenthal. Editing by Fred Barbash and Christopher Wilson