Legislation takes aim at unfair benefit cuts

WASHINGTON – A bill intended to make it harder for companies to reduce or eliminate pay and benefits promised and earned by employees and retirees was introduced in the U.S. Senate, officials said.

The Bankruptcy Fairness and Employee Benefits Protection Act was introduced by Sens. Jay Rockefeller, D-W.Va., and Elizabeth Warren, D-Mass.

The act will limit the ability of companies to reduce or terminate benefits for employees and retirees under the federal Bankruptcy Code and entitle retirees to the continuation of health care benefits for at least two years following the restructuring of the former employer-even if the court rules that the company is eventually allowed to halt benefits. The legislation also amends the Employee Retirement Income Security Act to provide employees and retirees with greater information about the health care benefits they have earned, and creates a legal presumption that benefits cannot be cut after the employee retires.

Karen Gorrell of Mineral Wells, a spokesman for the Century Aluminum retirees whose health benefits were terminated by the company, plans to research the bill to determine the impact, if any, to the retirees.

“Absolutely,” she said.

The difference with Century is the company didn’t file bankruptcy and the issue hinges on the interpretation of a provision in the labor contract, Gorrell said. Century closed the plant in 2009, idling about 600 employees, and later eliminated health insurance benefits to retirees.

Rockefeller has been among the staunchest supporters of the retirees, she said.

“Americans work hard each and every day under the promise that they will be treated fairly and with dignity,” Rockefeller said. “Sadly, far too many companies in West Virginia and elsewhere have abandoned the promises they’ve made to their workers through bankruptcy filings and other strategies to avoid paying their obligations. Continuing to allow companies to shift their bankruptcy costs onto the backs of employees and retirees is wrong, and this bill seeks to end this shameful practice by leveling the playing field for our workforce.”

The Bankruptcy Fairness and Employee Benefits Protection Act would:

* Prohibit companies from using the bankruptcy system to reduce pay and benefits for employees and retirees unless they can prove the cuts are necessary to prevent the liquidation.

* Require companies in bankruptcy to pay for retiree health care benefits for at least two years following the restructuring.

* Establish rights for municipal employees and retirees are similar to those in corporate bankruptcy cases.

* Require companies to continue making payments to pension plans while bankruptcy proceedings are ongoing.

* Require companies to provide specific information to employees about the duration of their retiree health care benefits.

* Create a legal presumption that promised health care benefits cannot be reduced after the employee retires.

* Commission a study by the Government Accountability Office on strategies companies can use to avoid paying promised benefits to employees and retirees.