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

Theresa Bordenave - Office of Senate Democratic Whip Dick Durbin

Apr 9, 2025 1:55 PM Apr 9, 2025 1:57 PM

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WASHINGTON, D.C. – U.S. Senate Democratic Whip Dick Durbin (D-IL), Ranking Member of the Senate Judiciary Committee, and U.S. Senator Josh Hawley (R-MO) 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.

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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.

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

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“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 Hawley. “Our bill would safeguard workers’ claims to wages, benefits, and retirement funds throughout bankruptcy proceedings.”

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

Improve Recoveries for Employees and Retirees. The bill doubles the maximum value of employee wage claims entitled to priority payment and allows additional priority claims for each employee benefit plan. 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), Tammy Duckworth (D-IL) and Amy Klobuchar (D-MN).

The Protecting Employees and Retirees in Bankruptcies Act 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; Alliance for Retired Americans; and the Association of Professional Flight Attendants.