Pro-labor push gains traction in bankruptcies

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 Congress.

Rep. Tim Ryan, D-Ohio, 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 Sen. Bernie Sanders of Vermont and Rep. Tulsi Gabbard of Hawaii, teamed up in July to demand answers from Toys Us’s owners after its bankruptcy left workers in the lurch.

Rep. Alexandria Ocasio-Cortez, D-N.Y., released a video featuring struggling former Toys Us workers on the first Black Friday since their layoffs. And Sen. 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. “They were at the food pantries.”

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 long-shot 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.