Sens. Jay Rockefeller, D-W.Va., and Elizabeth Warren, D-Mass., introduced legislation in the Senate on Tuesday to make it harder for companies to reduce or eliminate wages and benefits they promised to give their employees and retirees.
The new bill, called the Bankruptcy Fairness and Employee Benefits Protection Act, would specifically limit the ability of companies to reduce or cut off benefits to employees and retirees if those companies file for bankruptcy protection, according to a news release from Rockefeller’s office. The proposed law would guarantee retired workers would still have their health care benefits for two years after their former employers restructure their businesses under federal bankruptcy laws.
Those benefits would be guaranteed to retirees even if a federal bankruptcy court eventually allows that company to halt future benefits.
“Americans work hard each and every day under the promise that they will be treated fairly and with dignity,” Rockefeller said in a news release. “Sadly, far too many companies in West Virginia and elsewhere have abandoned the promises they’ve made to their workers through bankruptcy filings and other strategies to avoid paying their obligations.
“Continuing to allow companies to shift their bankruptcy costs onto the backs of employees and retirees is wrong,” Rockefeller said. “This bill seeks to end this shameful practice by leveling the playing field for our workforce.”
Josh Sword, secretary-treasurer of the West Virginia AFL-CIO, said on Tuesday, “For decades, we have seen corporation after corporation file bankruptcy in an attempt to avoid paying benefits earned by employees and retirees.
“Tragically, these deceitful strategies have often worked because our federal bankruptcy laws protected almost everyone except the company’s workers and retirees. We have had steelworkers, autoworkers and, most recently, the United Mine Workers suffer because of flawed laws and corporate greed,” Sword said. “Sens. Rockefeller and Warren deserve a big thank you for introducing legislation to give workers and retirees some level of comfort from the unfortunate events of bankruptcy.”
Warren said, “Hardworking men and women who have earned their pensions as part of their pay and benefits should be respected when employers go through bankruptcy. “This bill will establish key protections for retirees and employees, and help make sure the critical benefits they were promised will be there for them in retirement.”
The Bankruptcy Fairness and Employee Benefits Protection Act would also:
| Prohibit companies from using the bankruptcy system to reduce pay and benefits for employees and retirees, unless they can prove those cuts are absolutely essential to prevent the company’s financial collapse.
| Establish rights for municipal employees and retirees that are similar to those in corporate bankruptcy cases.
| Require companies to continue making payments to pension plans while bankruptcy proceedings take place.
| Require companies to provide specific information to their employees about the duration of their retiree health care benefits;
| Legally presume that promised health care benefits cannot be reduced after any employee retires.
The legislation would also commission a Government Accountability Office study about the strategies some companies use to avoid paying promised benefits to employees and retirees.
Reach Paul J. Nyden at email@example.com or 304-348-5164.