S. 1381: Protecting Employees and Retirees in Business Bankruptcies Act of 2025

The "Protecting Employees and Retirees in Business Bankruptcies Act of 2025" is designed to provide greater protections for employees and retirees when companies go through bankruptcy. The bill focuses on several key areas to ensure that the rights and benefits of workers are safeguarded during such financial distress.

Improving Claim Priorities

The bill proposes enhancements to the priority of claims made by employees and retirees in bankruptcy proceedings. This means that those individuals would have a higher claim on the assets of the company compared to other creditors, ensuring they receive what they are owed first.

Severance Pay and Employee Benefits

One of the main aspects of the legislation is to ensure that employees receive their severance pay when a company files for bankruptcy. The bill explicitly mandates that any severance agreements made prior to bankruptcy are honored. Additionally, it aims to maintain worker benefits, protecting health and retirement benefits during the bankruptcy process.

Limiting Executive Compensation

To address concerns about fairness during bankruptcy, the bill includes provisions to limit the compensation of executives. This is to prevent excessive pay to executives while regular employees may be facing job losses and cuts to their benefits. The legislation includes protocols that allow for the recovery of excessive compensation that may have been awarded before the bankruptcy proceedings.

Labor Organization Claims

The bill clarifies how claims made by labor organizations will be treated during bankruptcy. It emphasizes the importance of fair treatment of these organizations and their claims in the context of settlements and benefits, ensuring that collective bargaining agreements are respected.

Job Preservation

Preserving jobs is a key goal of this bill. By providing better protections for employees, the legislation hopes to minimize job losses during bankruptcy proceedings and to encourage businesses to honor existing employment agreements and agreements regarding employee retirement benefits.

Retirement Security

The legislation aims to enhance retirement security for employees by ensuring that their retirement savings and plans are protected even in cases where the employer files for bankruptcy. This is intended to bolster the financial security of workers after they retire.

Regulatory Framework for Labor Settlements

The bill establishes a regulatory framework that must be followed for confirming bankruptcy plans that include labor settlements. This framework is designed to ensure that any agreements related to labor issues are dealt with fairly and transparently, which fosters trust in the bankruptcy process among employees and labor organizations.

Enforcement and Compliance

To support its goals, the bill includes measures for enforcement and compliance to ensure that companies adhere to the new regulations. This includes oversight mechanisms that will help ensure that the rights of employees and retirees are not overlooked during the bankruptcy process.

Relevant Companies

• GM (General Motors) - As a large automotive manufacturer, GM has faced bankruptcy in the past. This bill could impact how it handles employee claims and benefits in future financial restructurings.
• UAL (United Airlines) - The airline industry has experienced significant financial challenges, and if UAL were to file for bankruptcy again, this bill would affect its obligations to employees regarding severance and benefits.
• SLB (Schlumberger) - As a leading oilfield services company, SLB's operations are subject to market volatility. In the event of bankruptcy, employees could benefit from the protections outlined in this bill.