Protecting Employees and Retirees in Business Bankruptcies Act of 2025
Congress Proposes New Rules to Protect Worker Pay and Pensions During Company Bankruptcies
Stalled
No legislative action in over 90 days.
Legislative Progress
Key Points
- This bill changes bankruptcy laws to make sure employees and retirees are paid what they are owed before many other creditors. It doubles the amount of unpaid wages a worker can claim as a priority from $10,000 to $20,000 and removes strict time limits on when that money must have been earned to be eligible for payment.
- The policy protects people with company pensions and 401(k) plans. If a company's stock value drops because of fraud or if a pension plan is shut down during bankruptcy, workers would have a legal right to claim those financial losses in court, helping them recover retirement savings that might otherwise be lost forever.
- It targets high-level executive pay in failing companies. The bill bans special bonuses for top managers if the company has recently cut worker benefits or severance pay. It also allows the court to "claw back" or take back pay from executives if the company reduces the health or pension benefits it promised to its retirees.
- When a bankrupt company is sold, the bill requires courts to favor buyers who agree to keep current employees and maintain their existing health and pension plans. This is designed to save jobs and prevent new owners from using a sale to wipe out the benefits workers earned over many years.
- It makes it much harder for companies to use bankruptcy as a way to cancel union contracts or stop paying for retiree health insurance. Companies would have to prove to a judge that these cuts are the absolute minimum needed to keep the business running and that the cuts do not unfairly burden the workers compared to management.
Impact Analysis
Personal Impact
Life & Work
Small businesses going through bankruptcy would face stricter rules about how they treat employees and retirees, which could make reorganization more expensive and complex. On the other hand, small business owners who are owed money as employees of a larger bankrupt company would benefit from the stronger wage and benefit protections. The net effect depends on whether you're the employer or the employee in a bankruptcy situation.
Programs
Disabilities
Milestones
Read twice and referred to the Committee on the Judiciary. (text: CR S2523-2527)
Sent to a congressional committee for expert review. The committee decides whether this bill moves forward.
Introduced in Senate
The bill was officially filed and given a number. It now enters the legislative queue.
Votes
No votes have been recorded for this legislation yet.
Related News
3 articlesBill Offered That Would Increase Priority Of Employees During Bankruptcies
Senators Dick Durbin and Josh Hawley reintroduced the Protecting Employees and Retirees in Business Bankruptcies Act, which aims to modify Chapter 11 standards to increase the priority of employee wage claims and place new restrictions on executive compensation during corporate failures.
Durbin, Hawley Introduce Bipartisan Bill To Protect Employees When Businesses File For Bankruptcy
The bill would double the maximum value of employee wage claims entitled to priority payment from $10,000 to $20,000 and eliminate the 180-day restriction on when those wages must have been earned. It also targets 'golden parachutes' for executives if worker benefits are being cut.
Bipartisan Bill Aims to Protect Worker Pay in Corporate Bankruptcies
The Protecting Employees and Retirees in Business Bankruptcies Act would allow courts to 'claw back' executive bonuses if a company reduces retiree health or pension benefits. It also clarifies that the principal purpose of Chapter 11 is to preserve jobs and productive economic activity.
Source Information
Document Type
Congressional Bill
Official Title
Protecting Employees and Retirees in Business Bankruptcies Act of 2025
Data Sources
Sponsor
Cosponsors
(5)Analysis generated by AI. Always verify with official sources.