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The purpose of this enactment is to give unpaid wages and other
compensation including payments due for benefits in a bankruptcy a
first priority in distribution that ranks before all other claims including
the claims of secured creditors. This reflects the principle that
employees have a right to the wages, salaries, benefits and other
emoluments that they have earned by work, on an hour by hour basis,
notwithstanding the fact that they may not be normally payable on that
basis or have not actually been paid at the time of the bankruptcy, and
that the employer or the employer's creditors should not have a right to
take any part of those amounts in settlement of other claims.
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Security taken or granted before the enactment comes into force is
not affected.
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The enactment also increases the amounts of $5,000 in wages and
salaries and $2,000 in commissions, being the amounts that presently
rank after secured creditors and certain other claims and charges, and
establishes the first priority at $10,000 and $4,000 respectively.
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