Workers can lose everything when their employer files for bankruptcy. At least for now.
A pro-labor movement sparked by the employees of Toys “R” Us Inc., and taken up by Sears Holdings Corp., has reached the U.S. Congress.
Representative Tim Ryan, an Ohio Democrat, said he plans to reintroduce 2017 legislation that would define worker claims in bankruptcy as administrative expenses, meaning they’d be paid in full, like the investment bankers, consultants, lawyers and liquidators who earn millions of dollars dismantling dying companies.
It comes after 19 Democrats, including Ryan and presidential candidates Bernie Sanders and Tulsi Gabbard, teamed up in July to demand answers from Toys “R” Us’s owners after its bankruptcy left workers in the lurch. Representative Alexandria Ocasio-Cortez released a video featuring struggling former Toys “R” Us workers on the first Black Friday since their layoffs. And Senator Elizabeth Warren, another 2020 candidate, publicly challenged former Sears Chairman Eddie Lampert’s “commitment to the company’s employees” in a January letter.
Ryan said the stories of workers whose finances were devastated during the 35-day government shutdown, which ended Jan. 25, highlighted the need for such measures.
“It laid bare that workers who are perceived to have pretty solid jobs could not miss one paycheck,” Ryan said in an interview. “They were at the food pantries.”
Ryan’s Legislation
The bill would prioritize pension claims for fired workers when their companies go under. It joins legislation to hike taxes on the wealthiest Americans, provide wage and leave guarantees and restrict corporate share buybacks.
Though the bill is a longshot to become law because it would have to pass the Republican Senate, it could lead to legislation on the state level that would complicate the bankruptcy process.
Labor’s drive to be recognized as a full partner in the U.S. economy, boosted by a low jobless rate, was given a jolt by the Toys “R” Us workers. They pressured KKR & Co. and Bain Capital, the retailer’s private equity owners, to create a $20 million hardship fund in November for workers such as clerks, cashiers and warehouse staff hurt by the retailer’s liquidation. And after Sears filed for bankruptcy in October, it was Lampert’s vow to save about 40,000 jobs that helped him win a bid last month to keep the retailer in business.