Lawmakers Go To Bat for Workers and Retirees of Companies in Bankruptcy
In Washington, lawmakers are acting on their concerns for the financial wellbeing of employees and retirees of companies who file bankruptcy. With the poor state of the nation's economy, the number of businesses filing bankruptcy is rising along with the rate of consumers who are filing bankruptcy.
Last September, a group of House Democrats proposed legislation to protect the wages and benefits of workers and retirees who work or have worked for companies who file bankruptcy.
Rep. John Conyers (D-MI), the chairman of the House Judiciary Committee, said that the legislation was introduced in an attempt to cover the shortcomings of current bankruptcy laws with respect to how employees and retired workers of companies who file bankruptcy are treated.
Conyers told Financial Week that some businesses have been known to use Chapter 11 bankruptcy as leverage to bust unions. He said that workers and retirees often get the short end of the stick when a company is filing bankruptcy, but the bankrupt businesses may still provide its executives with cushy bonuses and stock options.
The Protecting Employees and Retirees in Business Bankruptcies Act of 2007 (H.R. 3652) is sponsored by Conyers and 51 other co-sponsors and was introduced on September 25, 2007.
The measure is still an open issue in Congress and seeks to amend federal bankruptcy law and level the playing field when companies that are filing bankruptcy attempt to cut jobs, reduce wages, eliminate collective bargaining agreements or cancel retirees' medical coverage.
The bill also would stop companies in bankruptcy from rewarding their executives and senior management employees with huge performance bonuses and other incentives.
While this legislation seems promising for employees and retirees who work or have worked for companies who are filing bankruptcy, H.R. 3652 has yet to be voted on by the U.S. House or Senate or considered by the president, so it has a long road ahead before becoming law.