“Employees shouldn’t be the ones left holding the bag when companies go under. Rather than giving precedence to the desires of predatory creditors, we should prioritize workers and protect the compensation they’ve earned through years of hard work,” said Sen. Hawley. “Our bill would safeguard workers’ claims to wages, benefits, and retirement funds throughout bankruptcy proceedings.”
The Protecting Employees and Retirees in Business Bankruptcies Act would:

Improve recoveries for employees and retirees. The bill 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. The bill would also double “the maximum value of employee wage claims entitled to priority payment,” from $10,000 to $20,000.
Protect workers’ retiree benefits. The bill 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, commonly known as “golden parachutes.”

Related: New DOL guidance on ‘abandoned’ 401(k)s improves retirement plan payouts

The bill has earned the endorsement of the International Brotherhood of Teamsters; AFL-CIO; American Federation of Teachers; Transport Workers Union; United Mine Workers of America; Airline Pilots Association and several other labor groups.

Instant Insights /

Senators reintroduce bill protecting retirement savings when companies file for bankruptcy

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