Rockefeller, Warren Introduce Legislation to Protect Employees and Retirees from Unfair Benefit Cuts
The Bankruptcy Fairness and Employee Benefits Protection Act builds on the Senators' shared commitment and record of fighting for nation's workers
WASHINGTON, D.C. - Senators Jay Rockefeller (D-WV) and Elizabeth Warren (D-MA), today introduced legislation, The Bankruptcy Fairness and Employee Benefits Protection Act, that would make it harder for companies to reduce or eliminate the pay and benefits their employees and retirees were promised-and earned-during their careers.
Among other provisions, the bill would limit the ability of companies to reduce or terminate benefits for employees and retirees under the federal Bankruptcy Code, and entitle retirees to the continuation of health care benefits for at least two years following the restructuring of their former employer-even if the court rules that the company is eventually allowed to halt benefits. The legislation also amends the Employee Retirement Income Security Act (ERISA) to provide employees and retirees with greater information about the health care benefits they have earned, and creates a legal presumption that benefits cannot be cut after the employee retires.
"Americans work hard each and every day under the promise that they will be treated fairly and with dignity," Rockefeller said. "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, and this bill seeks to end this shameful practice by leveling the playing field for our workforce."
"Hardworking men and women who have earned their pensions as part of their pay and benefits should be respected when employers go through bankruptcy," said Senator Warren. "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:
- Prohibit companies from using the bankruptcy system to reduce pay and benefits for employees and retirees, unless they can prove that the benefits cuts they have proposed are absolutely necessary to prevent the company's liquidation;
- Require companies in bankruptcy to pay for retiree health care benefits for at least two years following the company's restructuring;
- 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 are ongoing;
- Require companies to provide specific information to employees about the duration of their retiree health care benefits;
- Create a legal presumption that promised health care benefits cannot be reduced after the employee retires; and
- Commission a study by the Government Accountability Office (GAO) on strategies some companies use to avoid paying promised benefits to their employees and retirees.
More information about the Bankruptcy Fairness and Employee Benefits Protection Act is available here.
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