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Enron. Rights of the Employees Presented By Ho-Min Lee Mike Forbes. Agenda:. Overview Timeline Rights of Employees Under Bankruptcy (creditors) ERISA WARN Act Legislation in Action (H.R. 3762 & S. 1992) Conclusion. Enron: An Overview.
Enron Rights of the Employees Presented By Ho-Min Lee Mike Forbes Agenda:
  • Overview
  • Timeline
  • Rights of Employees
  • Under Bankruptcy (creditors)
  • WARN Act
  • Legislation in Action (H.R. 3762 & S. 1992)
  • Conclusion
  • Enron: An Overview
  • Dec. 2, 2001: Enron files for Chapter 11 Bankruptcy.
  • 4,000+ employees were laid off
  • Nearly 20,000 employees lost an estimated $1 billion in stock (Savings & Pension Plan).
  • Timeline
  • Nov. 28, 2001- Enron shares falls below $1
  • Dec. 2, 2001- Enron files for Chapter 11 Bankruptcy and bars employees from selling their shares tied into their retirement plans.
  • Jan. 9, 2002- US Justice department begins a criminal investigation of Enron.
  • Jan. 23- FBI begins investigation of document shredding.
  • Jan. 28- A class action lawsuit is filed by 400 employees (present and former) against Enron executives, Arthur Anderson, and others to claim damages for their lost pension plans.
  • Feb. 4- Enron’s top executives implicated in plot to inflate profits and hide losses.
  • March 20- Both the House and Senate offer pension reform plans, in light of situation with Enron.
  • April 11- The House passes Bush’s new pension reform bill.
  • Rights of Employees
  • Chapter 11 Bankruptcy
  • Lists employees as unsecured creditors
  • As an unsecured creditors, employees are entitled to claim their losses after, and only after government (taxes), administration, lawyers, and secured creditors have collected from the bankruptcy.
  • Government (taxes), administrative expenses, & lawyers
  • Secured Creditors
  • Unsecured Creditors
  • Rights of The Employees
  • Employee Retirement Investment Securities Act of 1974 (ERISA)
  • Federal statute that protects employee pensions and other benefits
  • Overrules almost all state laws
  • Enforced by the Department of Labor *Notable Rules: States that employers have a fiduciary obligation to act in the best interest of employees and their pensions. *Violations: Enron, Arthur Anderson, Enron executives, etc. breached there fiduciary duties to inform employees that Enron stock was a bad investment.
  • Rights of Employees
  • Worker Adjustment & Retraining Notification Act (WARN)
  • Applies tocompanies with 100+ employees laying off 50+ employees within a 30 day period
  • Employer must give employee 60 days notice of termination
  • Employees are entitled to $500 for every day they are not notified, for up to $30,000.
  • Enron laid off over 4,000 the day they went bankrupt. Although Enron is protected by the employment-at-will doctrine, they failed to give employees sufficient notice of termination, thus violating the WARN Act.
  • Proposed Legislation
  • President Bush calls for new legislation to protect employee pensions.
  • H.R. 3762 Pension Security Act (Boehner-Johnson)
  • Notification of blackouts
  • Stops insider trading during blackouts
  • Allows employees to sell company stock after 3 years
  • S. 1992 Protecting America’s Pensions Act of 2002 (Miller-Rangel)
  • Places a cap on amount of company stock in pension plans
  • Increases fiduciary liabilities
  • Mandatory elected joint trusteeships
  • Conclusion
  • In conclusion, the Enron bankruptcy has left employees with very few legal options.
  • The WARN act gives them some compensation for their termination.
  • As unsecured creditors, it is doubtful that they will reclaim their losses from the bankruptcy.
  • Most employees are relying upon ERISA laws to collect their lost pension funds (by way of class action lawsuit).
  • Because of the Enron collapse, new legislation (although controversial) is currently underway that will better protect employee retirement plans.
  • Proposed Website
  • List how employees have been effected by Enron Bankruptcy
  • List the laws that protect employees
  • List new legislation
  • Impact of Enron Bankruptcy
  • Related Search
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