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In the U.S., employees are also protected to a degree. Unpaid wage claims up to $10k, including vacation, severance, or sick leave pay, are prioritized over ge

• wjnc 9y ago
  Are there creditors that have preference above unpaid wage claims in the US (like banks)? In my little country in Europe (NL), wage has near absolute preference so there is little chance of unpaid wages not being paid. Almost any company has some assets. In Finland (see GP) there's even government insurance.
  • lawguy 9y ago
    You can see the list in the link above, but the short answer is very few, such as domestic support (alimony, child support) and administrative expenses of the bankruptcy. The most important creditors with higher priority who are not on the list are secured creditors, such as lenders with mortgages on real and personal property -- but I'd be surprised if this varied much internationally. Prioritized wages get paid even before unpaid taxes do.
    • thinkloop 9y ago
      I'm surprised secured credit would get priority over wages. Creditors make money by taking on risk. Wage workers make no such agreement.
      • evgen 9y ago
        Probably because the security is specific real property, so that someone can't give everyone a $100k/week raise and then declare bankruptcy and use the court against the secured creditor. If this were not the case then it would be hard to convince someone to lend for the various bits of real property that make commerce work. Secured creditors are taking on a risk, but not a very big risk because they have first claim on the secured property.
        • thinkloop 9y ago
          Interesting! Well thought.
  • svennek 9y ago
    In Denmark we have a government body litteraly called the "salary guarantee foundation" (well obviously it is named in danish), which pays salaries (including those you are entitled to after you are fired) up to 160K DKK (so around 21500 EUR). That foundation then goes first in queue in the bankrupcy claims (but often doesn't get anything).... But the salary up to that point is safe for the employee... no matter if the company has any assets or not.. (EDIT): oh yeah, and we have state funded health care too...
  • roel_v 9y ago
    This is flat out wrong. In bankruptcy in .nl, the uwv (a semi government agency) takes over responsibility for paying up to 13 weeks before and 6 weeks after termination of employment, which is usually a few days after the bankruptcy. Apart from that, wages are 'preferenced' but at the same rank as the uwv and the tax office. However, all of those come after the 'separatisten', which are creditors with a 'security right' (don't know the english term). Which means in practice (since most companies will have pawned their assets to banks for credit lines) that banks will get the most money, 'preferred creditors' some money and others nothing. So while in nl, in case of bankruptcy, most employees will get all wages and overtime they were owed, it has nothing to do with some 'near absolute preference' they supposedly have. And if you don't start bankruptcy proceedings at most say four to six weeks after you didn't get paid, there is a real chance you won't get your full wage. And this is by design, it says so in the 'parlementaire geschiedenis' of the law (record of the discussions around new laws that provide context for future interpretation) Source: have degree in Dutch law, this is elementary 'employment law', but 30 secs of googling will show that I'm not just making things up.
    • wjnc 9y ago
      Apologies. The 'near absolute' was wrong. And the part about who pays the wages by implication as well. At least we got a good explanation, but not thanks to me.