Key Vote Alert (JOBS) Act (S. 1637)

March 3, 2004

TO THE MEMBERS OF THE UNITED STATES SENATE:

It has come to our attention that when the Senate considers the Jumpstart Our Business Strength (JOBS) Act (S. 1637), an amendment might be offered that would dramatically expand the Worker Adjustment and Retraining Notification (WARN) Act. It is our understanding that this amendment would be substantially similar to legislation (S. 2090) introduced by Sen. Tom Daschle. On behalf of the U.S. Chamber of Commerce, the world's largest business federation representing more than three million businesses and organizations of every size, and in every industry sector and region, I urge you to vote
against this or any similar amendment.

The WARN Act is the product of a long history of hearings, markups, a presidential veto, negotiations, and compromise. The careful compromise that paved the way for the WARN Act reflected concern for the impact that mass layoffs and plant closings might have on local communities while also addressing the needs of employers to retain control over fundamental business decisions, such as whether or not to continue unprofitable segments of a business. The proposed expansion, on the other hand, has not been the subject of a single hearing or been vetted in any manner by the appropriate committees of
jurisdiction.

Ostensibly directed at so-called "outsourcing"—a development itself that is very little understood and subject to much confusion—the amendment in fact sweeps much more broadly. For example, it would expand the WARN Act notice from 60 to 90 days for any covered actions and radically expand the definition of covered mass layoffs to any employment loss of 50 or more regardless of the size of the business. In other words, a large shipbuilder with 25,000 employees could trigger notice requirements if it reduced its workforce by a meager two-tenths of one percent over a 90-day period. These two changes alone, not linked to outsourcing issues at all, destroy the underpinnings of the original Act.
It should be noted that a failure to provide notice under the Act can lead to significant backpay liability for all employees affected.

The lack of any careful review in the legislation is clearly reflected in the poorly constructed and unworkable provisions related to outsourcing. For example, the amendment would trigger notice (and thus potential backpay liability) under the WARN Act if an employer takes "any action…the effect of which is to create, shift, or transfer" employment positions overseas that resulted in an employment loss of 15 or more employees during a 30-day period. But, among other problems, the amendment does not clarify what it means to "create" an "employment position" overseas. If a U.S. manufacturer
decides to purchase a component from a contractor rather than make it in-house, it may have no way of knowing where the contractor established manufacturing facilities to make that component, or whether it hired any new staff or made do with existing personnel. Consequently, the manufacturer would not be able to discern whether it had obligations under the amendment to provide advanced notice to any laid off employees. Indeed, even the most tenuous association between two events, such as closeness in timing, could trigger the notice requirements.

The amendment is both extremely broad and vague, imposing new significant obligations on the employer community without even the remotest pretense of careful review by the relevant Senate committees of jurisdiction. For theses reasons, we will consider including votes on or in relation to WARN Act expansion similar to S. 2090 as possible key votes for our annual How They Voted scorecard.

Sincerely,

R. Bruce Josten