What could be worse than your losing your job because your employer is going out of business? Unfortunately, it can get worse. If you work at company that goes bankrupt, you may not be able to collect all of the wages and benefits you have earned.
That is why the Wisconsin State AFL-CIO is calling on the State Assembly to pass SB 2 without delay. Call your Representative today to show your support for the Wage Protection Act:
1-800-362-9472
Currently when a business fails in our state there is a $3,000 cap on the unpaid wages and benefits that a worker can attempt to collect for the labor that he or she has already supplied. After that, banks swoop in and claim whatever assets are left.
$3,000 doesn’t go very far if you have a mortgage to pay, kids to feed and are facing an indefinite period of unemployment.
“Without a strong wage claim law companies in financial difficulty and their bank creditors have no incentive to make certain that employees are fully compensated,” says David Newby, Wisconsin State AFL-CIO President. "Whatever happened to a fair day's pay for a fair day's work?"
So, why don’t working people just walk away from a troubled company before they are owed large sums of money? That is easier said than done, especially in a recession. Workers who quit their jobs are generally ineligible for unemployment benefits. Partial pay is better than no pay at all.
“In some cases employees will work for a time without receiving any paycheck, based on the assurances of the employer that their loyalty in hard times will be rewarded,” explains Wisconsin State AFL-CIO Secretary-Treasurer Phil Neuenfeldt. “Other workers may stay even when they know that their employer is in financial trouble, because they have no other means of getting health insurance for themselves and their families.”
No one wins in a bankruptcy. But priorities must be set when distributing remaining company assets. Who can best afford to take a financial loss? Certainly not working families who often live paycheck to paycheck even in “good” financial times.
Last year the State Senate passed an important bill which would increase the amount of unpaid wages and benefits that a worker can collect to $10,950.
But now, SB 2: The Wage Protection Act appears to be stalled in the State Assembly. This legislation is strongly opposed by corporate banking lobbyists. We must remind our representatives in Madison to act swiftly on the behalf of ordinary working people, not delay in the interests of elite bankers.
Big banks are structured to handle financial risk, to the tune of billions of dollars; working families are not. Furthermore, even when banks fail to accurately and responsibly calculate their risk, the government uses taxes collected from working people to bail them out.
Call your State Assembly Representative today! Tell them that they must put the needs of working families above the greed of big bank special interests by passing SB 2.
1-800-362-9472
You can also send an email to your Assembly Representative: http://www.legis.state.wi.us/w3asp/contact/EmailDirectory.aspx?house=assembly
Not sure who your Assembly Representative is? You can use this link to look it up: http://waml.legis.state.wi.us
Representatives Phil Garthwaite, Chris Sinicki, Cory Mason, Spencer Black, Bob Turner, Andy Jorgensen, Josh Zepnick and David Cullen are cosponsoring SB 2 in the Assembly. They still need your encouragement, but make sure to thank them when you call.
Below are some more detailed reasons that working families should come first and bloated banks should wait their turn, if you would like to pick one to enhance your phone call or email. Pass The Wage Protection Act because:
- By opposing the higher cap, what the banks are really saying is that they want access to the wages and benefits owed to employees to help ensure repayment of business loans. These wages are payment for labor already performed for the company, labor from which the company and its bank have already benefited.
- The wages and benefits of employees, if properly paid in the normal course of business, would not even be available to a bank for the repayment of a loan. These earned wages and benefits belong to the employees and should not be viewed as remaining assets to repay a business loan.
- Working people rely on the integrity of their employer. They must rely on a good faith understanding that they will receive promised wages and benefits in return for their labor. Any instance of not paying workers what they have earned is a serious breakdown in the social contract. Such injustice undermines the employer-employee relationship in our society as a whole.
- Employees cannot demand to see the company books to determine an employer’s financial health and whether it is advisable for them to continue to work for a company. On the other hand, banks can demand access to all company financial records to determine their risk.
- Employees cannot say: “I’ll only work for you today if you pay me today.” Therefore they should be paid before suppliers who can demand cash on delivery.
- According to the U.S. Treasury, some 19 Wisconsin-based banks received at least $2,512,102,000 in taxpayer-backed TARP bailout funds. The rescue of the banking industry nationwide was in response to reckless financial practices, erosion of adequate regulation and greed—creating a crisis for which workers were not responsible. By opposing SB 2, banks that were helped by taxpayers will deny workers a chance to recover more of what they are owed by their employers. This means that some unpaid workers—who face their own dire financial crisis with the loss of a job—will help to bail out banks yet again.
- Banks are in business to make loans. Banks have access to company accounts and have many ways to assess the credit worthiness of any business. Once a business loan is made, they can monitor the financial health of any company and modify repayment terms.
- Banks are required by law to maintain adequate loan-loss reserve funds to handle risk exposure. This is necessary because, in the ordinary course of business, banks and regulators know that a certain percentage of business loans will not be fully repaid, even in prosperous times. Banks are structured to handle financial risk.
Wisconsin working families are simply asking for the ability to try to recover more of what they have earned and are owed by their employers. SB 2 is an issue of fundamental fairness. Make sure your Assembly member knows it!
(Top Photo: Money bags representing the profits that big banks are currently making at the expense of working people. Bottom Photo: Wisconsin State AFL-CIO Secretary-Treasurer Phil Neuenfeldt and President David Newby. Credit for Both Photos: Sue Ledbetter.)
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