Getting More Than Justice on Paper: Bankruptcy Priorities and the Crisis of Unpaid Wages

Donald Sloat, a fifty-nine-year-old man from Maryland, worked for twenty-two years for Hill Enterprises—a cabinetmaker. Devoted to his job, Mr. Sloat “work[ed] his way up from a carpenter to a project engineer,” until he resigned in 2010. Prior to his resignation, his employers often asked him to wait on cashing his paychecks or neglected to pay him at all; and so, at the time he left Hill Enterprises, the company owed him $17,000 in unpaid wages. Unfortunately, Mr. Sloat was unable to recover the money. Shortly after his resignation, the company filed for bankruptcy, and holding almost no assets, it could not pay its creditors. Although Mr. Sloat’s wage claims were completely justified, he never received the money he had worked for and, as a result, underwent financial difficulties himself.

What is troubling is that Donald Sloat is not alone. All over the country, employers fail to pay employees their legal rights (wages, pensions, or other benefits), and employees often lose weeks’ or even months’ worth of wages. The wage theft often occurs because employees are reluctant to file a claim against their employer. However, in many cases, even when an employee does file a claim (and even after she receives a judgment in her favor), she still isn’t paid. The judgment cannot be enforced, and the employee is left with a winning claim, but with no possibility to collect. This Article discusses this subset of cases—those in which the employee filed a claim against her employer (either within or outside of bankruptcy), her claim was declared justified, but the judgment remained on paper and uncollected. The reason for the failure to collect being the employer declared bankruptcy or otherwise avoided payment.

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