What can I expect if my ex-employer claims bankruptcy and owes me back wages?

Answered December 22, 2009 06:38. Good news, sort of. The Bankruptcy Code provides some protection for holders of wage claims against employers who file bankruptcy. In short, holders of wage, commission, salary (including vacation entitlements, severance, and sick leave pay) claims earned within 180 days before the employer files a bankruptcy case or closes its doors (180 days before whichever comes first) are entitled to special treatment in the employer's bankruptcy case. The claim up to $10,950 per employee is protected from the discharge in the case and that claim is entitled to payment in the bankruptcy case as a priority claim under 11 U.S.C. § 507(a)(4). If you know there are other employees with unpaid wage claims, you should talk to a bankruptcy attorney immediately upon discovering that the employer files a bankruptcy case.

If you obtain your money judgment, you will have to collect the judgment by garnishing the business bank accounts or other means of collection which you should discuss with your attorney. It is also possible to sue the owners of the company personally for some unpaid wage claims, which tends to prompt quicker payment on the claims.