Congress·In Committee·S. 1381

Congress Proposes New Rules to Protect Worker Pay and Pensions During Company Bankruptcies

Protecting Employees and Retirees in Business Bankruptcies Act of 2025

12 months ago·View on Congress.gov

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Stalled

No legislative action in over 90 days.

Legislative Progress

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House

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Law

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.

Labor EmploymentEconomy Finance

Impact Analysis

Personal Impact

Who is affectedScoreImpactCertaintyScopeDurationSentiment

Scores: 1 = low, 5 = highSentiment: -5 to +5 (net benefit)

Milestones

2 milestones2 actions

Apr 9, 2025Senate

Read twice and referred to the Committee on the Judiciary. (text: CR S2523-2527)

Apr 9, 2025

Introduced in Senate

Related News

3 articles

Bloomberg Law·12 months ago

Bill 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.

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RiverBender·12 months ago

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.

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The Hill·12 months ago

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.