12.05.24

Durbin, Hawley Introduce Bipartisan Bill To Protect Employees When Businesses File For Bankruptcy

The protecting Employees and Retirees In Business Act would ensure rank-and-file employees retain more of their earned wages, benefits, and retirement savings when their employer files for Chapter 11 bankruptcy

WASHINGTON – U.S. Senate Majority Whip Dick Durbin (D-IL), Chair of the Senate Judiciary Committee, and U.S. Senator Josh Hawley (R-MO), a member of the Senate Judiciary Committee, today introduced the Protecting Employees and Retirees in Business Bankruptcies Act.  The bipartisan legislation would correct abuses of the bankruptcy process that deprive employees and retirees of their hard-earned wages, benefits, and retirement savings. 

As businesses’ bankruptcy filings have increased, jobs, pensions, and long-promised benefits are at risk.  Yet, laws have not adapted to give employees and retirees a fair shake in the bankruptcy process.  The Protecting Employees and Retirees in Business Bankruptcies Act would modify Chapter 11 bankruptcy procedures by expanding available claims for employees and retirees and granting them improved priority, while placing restrictions on excessive compensation for executives.

“Employees should not have to panic that they will lose their hard-earned wages, benefits, and retirement savings when their company files for bankruptcy,” said Durbin.  “The Protecting Employees and Retirees in Business Bankruptcies Act would ensure that all employees, not just those at the top, receive the benefits they were promised.”

“When companies go bankrupt, workers—and not predatory creditors—should be taken care of first. This legislation would prioritize workers' claims to wages, benefits, and retirement funds in bankruptcy proceedings, protecting compensation earned through years of hard work,” said Hawley.

“America’s corporate bankruptcy laws put executives first and workers last.  The system is broken and must be reversed,” said Teamsters General President Sean M. O’Brien.  “Greedy corporations are allowed to use bankruptcy to deprive workers and retirees of their hard-fought earnings, while padding the pockets of C-suite executives.  The Teamsters Union applauds Sen. Durbin and Sen. Hawley for their bipartisan collaboration to protect working people.  We will use the full weight of our powerful union to support such long overdue corporate bankruptcy reform.”

"For too long, the workers who dedicate long, hard hours to providing for themselves and their families have suffered when their employees declare bankruptcy — paying the price for what often turns out to be an abuse of our country’s current bankruptcy process. The Protecting Employees and Retirees in Business Bankruptcies Act is a piece of common-sense legislation that protects workers and preserves their hard-earned benefits, and we urge the swift passage of this bill into law,” said International Association of Sheet Metal, Air, Rail and Transportation Workers General President Michael Coleman.

“Abuses of our bankruptcy processes have for too long allowed companies to prioritize CEO compensation while shoving workers’ hard-earned benefits onto the chopping block,” said United Steelworkers (USW) President David McCall.  “The bipartisan Protecting Employees and Retirees in Business Bankruptcies Act remedies long established inequities by improving wage claims for workers and retirees, restricting excessive executive payouts and refocusing our bankruptcy law on preserving jobs during a reorganization.” 

"Too often, our bankruptcy laws allow corporations to reorganize unfairly on the backs of working people, putting wages and pensions that workers have already earned and bargained for on the chopping block.  Meanwhile, executives give themselves a pat on the back at the end of a bankruptcy process with fat bonus checks. It's time for reform.  The Protecting Employees and Retirees in Business Bankruptcies Act would create more balance in the system - giving workers' wages greater priority, providing more protection for their hard-earned benefits, and stopping the executive compensation spending sprees that insult all those asked to sacrifice, workers and other creditors alike, to save a company," said AFL-CIO. 

"Incompetent and ill-intentioned corporate executives who drive companies into bankruptcy are allowed, today, to give themselves massive bonuses while destroying workers' negotiated wages, benefits, and pension," said Transport Workers Union International President John Samuelsen.  "It is unconscionable that greedy bosses are allowed to use our legal system to reward themselves for bad decisions.  The Protecting Employees and Retirees in Business Bankruptcies Act closes these insane loopholes and refocuses the bankruptcy code to focus on what our government should be focus on when a company enteres bankruptcy: creating good jobs with stron union contracts for workers.  The Transport Workers Union strongly supports this bill and we applaud Senators Durbin and Hawley for standing up for working people."

“Bankruptcy should not be a “shrewd” business maneuver to slash jobs, dump earned pensions, and cut contracts while executives and Wall Street get rich with court-approved payments and bonuses.  The Protecting Employees and Retirees in Business Bankruptcies Act will close loopholes in the bankruptcy process and protect the interests of the workers and retirees who make companies successful.  This is one important step toward rebalancing our economy, and we urge Congress to pass it without delay,” said Association of Flight Attendants-CWA Internal President Sara Nelson.

“Coal miners have seen a record number of bankruptcies in the last decade.  United Mine Workers of America (UMWA) members regularly defer a portion of their wages so that companies can pay into benefit packages designed to help workers and their families.  The current bankruptcy laws allow companies to take these deferred wages, use them for other purposes, and then declare bankruptcy absolving themselves of responsibility.  Workers often have their union contracts thrown out and lose their benefits.   The UMWA supports the Protecting Employees and Retirees in Business Bankruptcies Act as a first step in the right direction to protect workers, their families, and benefits from companies who file bankruptcy to rid themselves of their responsibilities,” said Cecil E. Roberts, United Mine Workers of America President.

"Reforming bankruptcy law is more crucial than ever.  For too long, corporations and Wall Street have exploited bankruptcy to deny workers and retirees their hard-earned wages and benefits—and this must stop.  We urge lawmakers to change the laws that disproportionately favor the wealthy and allow companies to shortchange employees.  We applaud Senator Durbin for introducing legislation that would protect retiree and healthcare benefits in bankruptcy cases, which is an important step toward ensuring fairness for workers and retirees,"  said Communications Workers of America Director of Government Affairs Dan Mauer.

“For far too long, our unbalanced corporate bankruptcy laws have prioritized corporate executive compensation and Wall Street profits over worker wages, pensions, and retiree health care benefits, including hard-fought wages, benefits, and protections won at the bargaining table," said Internationl Federation of Professional Technical Engineers (IFPTE) President Matthew Biggs.  "IFPTE applauds Senator Durbin and Senator Hawley for sponsoring the Protecting Employees and Retirees in Business Bankruptcies Act, legislation that will restore balance to our bankruptcy laws by improving workers’ and retirees’ ability to protect and recover wages and benefits, making it harder to reject collective bargaining obligations during bankruptcy, and clarifying that the Chapter 11 bankruptcy process should focus on maintaining jobs."

“We are grateful to Sens. Durbin and Hawley for their leadership in bringing forth this comprehensive reform legislation that will prevent a repeat of that sad chapter in our history, provide much-needed transparency to the bankruptcy process, and benefit U.S. workers.  Airline workers know far too well the devastating effects corporate bankruptcies have on the lives of hardworking Americans.  Following 9/11, pilots, including myself, made enormous financial sacrifices to help save our airlines, only to have tens of billions of dollars taken from us in wage, pension, and benefit cuts, with court-dictated terms and conditions lasting years longer than required to reorganize and to return to profitability,” said Air Line Pilots Association (ALPA) President Capt. Jason Ambrosi.

“Flight Attendants and other aviation workers have endured our fair share of bankruptcies throughout the course of modern aviation history.  Airline employees are often the first on the chopping block with little regard for our lives and livelihoods," said the Association of Professional Flight Attendants (APFA).  The rank-and-file who depend on each and every paycheck suffer the most, while corporate executives are shielded, and at times even rewarded, for financial mismanagement during tough times.  APFA is committed to fighting corporate greed and is proud to endorse the Protecting Employees and Retirees in Business Bankruptcies Act.  We appreciate Senator Durbin and Senator Hawley for demonstrating their commitment to worker fairness” 

Specifically, the Protect Employees and Retirees in Business Bankruptcies Act would:

  • Improve Recoveries for Employees and Retirees.  The bill increases the maximum value of employee wage claims entitled to priority payment from $10,000 to $20,000 per employee and allows an additional priority claim for each employee benefit plan of up to $20,000 per employee.  It also eliminates the restriction that priority wage and benefit claims must be earned within 180 days of the bankruptcy filing to be entitled to priority and would allow additional priority claims for workers’ severance pay.
  • Protect Workers’ Rights in Bankruptcy.  The bill tightens the conditions under which collective bargaining agreements can be rejected in bankruptcy.  It also toughens the procedures through which retiree benefits can be reduced or eliminated. 
  • Restrict Excessive Executive Compensation Programs.  The bill raises the threshold for obtaining court approval for executive bonuses and other excessive payouts to senior executives, the company’s 20 highest-paid employees, and highly paid consultants.  It also ensures that company insiders cannot retain their retirement or health benefit plans if rank-and-file workers have lost their benefits through the bankruptcy process.
  • Focus on Preserving Jobs.  The bill would re-center the Chapter 11 bankruptcy process by clarifying that the principal purpose of Chapter 11 is to preserve jobs and economically productive activity to the greatest extent possible.

Cosponsoring the legislation are U.S. Senators Brian Schatz (D-HI), Mazie Hirono (D-HI), Tammy Duckworth (D-IL), Sherrod Brown (D-OH), Jeff Merkley (D-OR), and Amy Klobuchar (D-MN).

The Protect Employees and Retirees in Bankruptcies Act has earned endorsements from the International Brotherhood of Teamsters, AFL-CIO, Transportation Workers Union, United Mine Workers of America, Association of State, County and Municipal Employees, Airline Pilots Association, United Steelworkers, International Association of Sheet Metal, Air, Rail and Transportation Workers, Communications Workers of America, Association of Flight Attendants-CWA, Alliance for Retired Americans, International Federation of Professional and Technical Engineers, and Association of Professional Flight Attendants.

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