S. 1381 · Where this bill is now
In committee
Introduced in the Senate, Apr 9, 2025
What this bill does
In plain words · AI-written from the official summaryProtects employee pay in company bankruptcies
When a company files for Chapter 11 bankruptcy (a legal process to reorganize and keep operating), this bill gives employees and retirees stronger protections. It doubles the amount employees can claim for unpaid wages and benefits from $10,000 to $20,000, removes time limits on when those wages were earned, and gives these claims higher priority in the bankruptcy process. The bill also limits how much executives can be paid during the reorganization and requires bankruptcy plans to help retirees recover benefits.
How it affects you
If your employer goes through Chapter 11 bankruptcy, you'd have better odds of recovering unpaid wages and benefits you're owed. Current and former employees would see their claims prioritized over other debts, and retirees would have more protection for pension and benefit claims. Executives at bankrupt companies would face restrictions on their compensation, which means more money potentially available for workers instead.
Read the official summary (Introduced in Senate, Apr 9, 2025)
Protecting Employees and Retirees in Business Bankruptcies Act of 2025
This bill establishes limits on executive compensation and provides protections for employee wages and benefits if an employer files for Chapter 11 (reorganization) bankruptcy.
First, the bill increases the limit on claims for wages, salaries, other employee benefits, and commissions from $10,000 to $20,000 and eliminates the requirement that such claims must have been earned within 180 days before the filing of the bankruptcy petition.
The bill grants certain claims higher priority in the bankruptcy process, including specific types of severance pay; contributions to an employee benefit plan; back pay, civil penalties, or damages arising from certain labor law violations; and certain pension plan withdrawal liabilities.
The bill also limits executive compensation under a reorganization plan. For example, insiders (parties with close relationships to the debtor), senior executives, and others as specified by the bill may only receive payments or other distributions that are generally applicable to all full-time employees, subject to certain limits. The bill further restricts the compensation of any insider who continues to be employed by the debtor.
A reorganization plan may only be approved if it provides for the recovery of claims relating to retiree benefits or for other financial returns paid under the plan.
The bill also provides protections for collective bargaining agreements (CBAs) during bankruptcy proceedings. If a proceeding resulting from a CBA was or could have been commenced before the bankruptcy, the bankruptcy does not act as a stay in such a proceeding.
Written by AI (Claude) using only the official summary by the Congressional Research Service, the Library of Congress’s nonpartisan research staff. It can miss nuance, so check the official summary and the bill text for details.
1st SessionS. 1381
A BILL
Protecting Employees and Retirees in Business Bankruptcies Act of 2025
Sponsor: Sen. Richard J. Durbin (D-IL) · Introduced Apr 9, 2025 · Finance and Financial Sector · 1 version of the text
Sources: Congress.gov actions and votes · bill text from GovInfo · latest official action Apr 9, 2025: “Read twice and referred to the Committee on the Judiciary. (text: CR S2523-2527)”
Sections
Title I — Improving Recoveries for Employees and Retirees · 5
- Sec. 101Increased wage priorityNo change
- Sec. 102Claim for stock value losses in defined contribution plansNo change
- Sec. 103Priority for severance pay and contributions to employee benefit plansNo change
- Sec. 104Financial returns for employees and retireesNo change
- Sec. 105Priority for WARN Act damagesNo change
Title II — Reducing Employees’ and Retirees’ Losses · 8
- Sec. 201Rejection of collective bargaining agreementsNo change
- Sec. 202Payment of insurance benefits to retired employeesNo change
- Sec. 203Protection of employee benefits in a sale of assetsNo change
- Sec. 204Claim for pension lossesNo change
- Sec. 205Payments by secured lenderNo change
- Sec. 206Preservation of jobs and benefitsNo change
- Sec. 207Termination of exclusivityNo change
- Sec. 208Claim for withdrawal liabilityNo change
Title III — Restricting Executive Compensation Programs · 6
- Sec. 301Executive compensation upon exit from bankruptcyNo change
- Sec. 302Limitations on executive compensation enhancementsNo change
- Sec. 303Prohibition against special compensation paymentsNo change
- Sec. 304Assumption of executive benefit plansNo change
- Sec. 305Recovery of executive compensationNo change
- Sec. 306Preferential compensation transferNo change