Lehman wants employees, not banks, the priority when businesses fold

State Rep. John Lehman, D-Racine, is hoping to move employees to the front of the payment line when their employer goes out of business.

Now, banks get first dibs on whatever money is leftover when a business folds. The banks passed employees in importance in the late-1990s. Lehman wants to change state law so employees are paid for their work before banks during bankruptcy proceedings.

In other words, Lehman wants to ensure employees get paid for their work, even if their bosses bankrupt the company.

Here's Lehman's press release on the "Wage Protection Act" he introduced in the Senate:

Making sure employees are paid the wages they’ve earned if their employer goes out of business or declares bankruptcy should be a top priority according to State Senator John Lehman (D-Racine). The Wage Protection Act he’s authored (Senate Bill 2) would help to make sure that happens by giving “super priority” to liens for unpaid, earned wages.

Lehman said, “The idea of this bill is simple, as an employee you ought to be able to count on getting a days pay for a days work. That’s not always the case under current state law and that’s why it needs to be changed.”

In the late 1990’s Wisconsin’s law was changed to put liens for bank loans ahead of those for worker’s earned wages in bankruptcy proceedings. In 2003 some fairness was brought back to the system by allowing the first $3,000 in earned but unpaid wages to be collected by workers before the liens of other creditors.

“We’re in tough economic times and all too many Wisconsinites are losing their jobs. These workers are already dealing with the challenge of finding a new job. They and their families shouldn’t also have to deal with the hardship of not getting wages they’ve already earned,” according to Lehman.

Eliminating the cap means workers will be able to collect the full amount of wages they are due. Many middle class families and employees paid on a monthly basis could be placed in situations where they would not be able to collect their earnings due to the current cap. The Wage Protection Act also closes a loophole created by a 7th Circuit Court of Appeals decision that held Wisconsin wage lien laws would not apply in bankruptcy cases. Finally, the bill would allow a collective bargaining representative to file a wage claim on behalf of an employee.

Noting the recent legislative attention for ailing banks, investment firms and the auto industry Lehman said, “We need to make sure that we’re looking out for the interests of the working folks too.”

He concluded, “No one wants to see someone lose their job because their employer went out of business or declared bankruptcy, but if that happens we ought to make sure state law is on the employees side in helping them receive the wages they’re entitled to.”