The Employee Rights in Employer Bankruptcy Act of 2019

Abstract

The Blackjewel Coal bankruptcy of summer 2019 exposed critical weaknesses in our state-based system of employee creditor protection. Notwithstanding employees' priority over other unsecured creditors in bankruptcy, and notwithstanding a bonding requirement imposed by the State of Kentucky, Blackjewel's final round of paychecks paid to employees 'bounced,' confronting employees with imminent personal bankruptcies, forgone medical and other services, and even mortgage foreclosure and homelessness.

This proposed bill works both to aid Blackjewel employees at the time of passage and to prevent future Blackjewel incidents. It does so by (a) assigning the Department of Labor a permanent representation role in future employer insolvencies; (b) federalizing the employer bonding requirements now found only in inconsistently administered state laws; (c) establishing an Employee Liquidity Support Fund to tide employees over while bankruptcy proceedings are pending; and (d) holding employing-firms' executive officers personally liable for violations of the Act's requirements.

Employing firms and their owners have enjoyed multiple forms of state patronage for decades in our nation, while employees have in general enjoyed only sporadic assistance from public sector institutions and, less now than any time since the early 20th century, labor unions. This Act will commence the task of enabling the nation to represent and protect the interests of its own productive citizenry - its labor force.

Keywords: Bankruptcy, Bonding, Collective Bargaining, Contract, Department of Labor, Employment, Insolvency, Labor, Labor Rights, Labor Unions

JEL Classification: J, L, M