INSOLVENCY STATUTES PREFERRING WAGES DUE EMPLOYEES

Authors

Paul G. Kauper, University of Michigan Law School

Abstract

Insolvency statutes of a majority of American states and the bankruptcy acts of the United States and England allow a preference to the claims of employees for wages accruing prior to the employer's insolvency or bankruptcy. Related types of legislation such as statutes creating an absolute lien on the employer's property to secure payment of wages, giving a preference to the employees of a deceased employer in the administration of his estate, exempting the wages of laborers from attachment or garnishment, making stockholders of a corporation individually liable for debts representing wages due employees, allowing employees to interpose their claims for wages as a priority in the event of the attachment of their employer's property by a general creditor, are indicative of the same legislative effort to give the wage-earner greater security. A relatively small number of the insolvency preference statutes are restricted in their scope to the insolvency either of corporations exclusively, or of corporations and partnerships. But for the most part they relate to the insolvency of persons in general (including corporations), or specifically include individuals, partnerships, and corporations. Illustrative again of the diversity in this field of legislation, some of the statutes restrict the preference to insolvency proceedings resulting in the appointment of a receiver, or of an assignee," or in the appointment of an assignee, receiver or trustee; but the majority, though in some cases reciting kinds of insolvency proceedings, authorize the preference whatever form the proceedings may assume. In some of the states no restrictions are placed either on the amount of the wages or salary preferred or on the period of time during which they must have accrued. Others place no restriction on the amount but limit the claim to wages or salary accruing within a specified time preceding the insolvency or bankruptcy. In two states the time but not the amount is limited. But in most of the states and under the United States and English bankruptcy acts, the labor or services must have been performed within a specified time, and limitations are placed on the amount preferred.

Recommended Citation

Paul G. Kauper, INSOLVENCY STATUTES PREFERRING WAGES DUE EMPLOYEES, 30 Mich. L. Rev. 504 (1932).
Available at: https://repository.law.umich.edu/mlr/vol30/iss4/3