Employees Entitled to Bankruptcy Heads Up & Job Security

Employees in California are newly entitled to a 15-day heads up of a utility’s bankruptcy filing, as well as job security for at least 6 months after the filing.  PG&E Corp. was prompted to disclose its intent to file for chapter 11 by a new California law that includes this novel provision requiring a 15 day warning to employees before seeking protection and freezing for at least six months the utility’s ability to potentially lay off workers after filing for bankruptcy.  While this law provides pre-emptive protection for employees (and creditors) of a CA utility that files for bankruptcy, it may be in conflict with federal bankruptcy law that dictates how an entity will function once it files for bankruptcy, as well as state law, by imposing a mandatory employment right.  However, as a utility is a state-regulated entity, this law may pass muster.  For more information on the validity of this law, please feel free to reach out to us.  For a brief description of the launch of this law, please review the following article.