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Last week we reviewed five of the most common, and problematic, labor and employment law issues in bankruptcy. You can read last week’s article here. Below are five additional labor and employment law concerns in bankruptcy that companies must know and assess when they are undergoing bankruptcy.
6. Back Wages
Companies must obviously pay their employees. The Bankruptcy Code recognizes this and places a priority on employee wages and benefits that were earned prior to the filing of a bankruptcy proceeding. Employee wages, salaries and commissions owed by an employer, $13,650 in 2020, that were earned within 180 days of a company filing for bankruptcy are given a higher priority in a bankruptcy proceeding (fourth priority level). Contributions to an employee’s benefit plan that were owed within 180 days of the company filing for bankruptcy, up to $13,650, are given a fifth level priority in any bankruptcy proceeding.