Law helps workers – not just banks and CEOs - get what they have earned

Key congressional and union leaders today announced new legislation that makes it harder for corporations to abuse the bankruptcy process, in part by ensuring CEOs make their fair share of the sacrifice.

“Businesses have used the bankruptcy system as a backdoor way to slash wages and benefits for current workers and break promises to retirees,” AFL-CIO Secretary-Treasurer Richard Trumka said. “Workers have been pushed further and further to the back of the line of those who will be made whole by the companies they have faithfully served. This legislation focuses on the important abuses in executive compensation that turn bankruptcy into an ordinary business strategy that enriches executives while impoverishing workers. And it helps workers get from the bottom of the pile back to the respectable top where they have earned the right to be.”

Under the “Protecting Employees and Retirees in Business Bankruptcies Act of 2007,” introduced by House Judiciary Chair John Conyers (D-Mich.), Assistant Senate Majority Leader Richard Durbin (D-Ill.) Senate Health, Education, Labor and Pensions Committee Chair Edward M. Kennedy (D-Mass.), workers would recover far more than they do today in lost wages, benefits and other earnings after a company declares bankruptcy.

The bill also says that when workers are forced to accept wage and benefit cuts, creditors can take the same percentage in labor cost savings from compensation paid to certain members of the board of directors. It also bars companies from leaving pensions plans or retiree health benefits intact for executives if these have been cut or eliminated for rank-and-file workers.

The political leaders at the press conference, who also included and several House Judiciary Subcommittee Chairs, heard from a worker and a retiree who have been hurt by today’s unfair system. Union leaders who spoke in support of this much needed bill included Air Line Pilots Association President John Prater, International General Vice President of the International Association of Machinists Robert Roach, United Steel Workers International Vice President Fred Redmond, Association of Flight Attendants International Vice President Veda Shook and United Auto Workers Legislative Director Alan Reuther.

James Roberts, who worked for 33 years mostly operating a crane at Bethlehem Steel in Pennsylvania, spoke at today’s press conference. A year after he retired with a degenerative bone disease his company filed for bankruptcy. He lost a third of his pension and all of his health insurance.

Contact: Caren Benjamin (202) 637-5018