Employment Litigation in Bankruptcy

Daily Journal
July 15, 2020

With unemployment and economic distress reaching levels unseen since the Great Depression, businesses and their employees may be seriously considering all of their financial options — including filing for bankruptcy protection. A business considering bankruptcy may have questions relating to employment claims. For example, can employment claims be eliminated or otherwise adjusted in bankruptcy? Can employment lawsuits continue even after the bankruptcy case is filed? How are employment class actions resolved in bankruptcy? For employee plaintiffs who are creditors, how will the bankruptcy filing of the employer defendant impact the employees’ claim? Do employees get priority treatment above other types of creditors? Finally, what happens if an employee plaintiff files a personal bankruptcy case — can he or she still pursue the lawsuit while in bankruptcy?

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