SW Legal studies in Business

Unionized Workers May File Mechanic's Liens Against Bankrupt Employer to Secure Vacation Pay
Description Appeals court overturned an earlier decision and held that unionized workers, like non-union workers, have the right to file mechanic's liens against an employer in bankruptcy to secure their claim for unpaid vacation time. Federal labor law does not conflict with this state law provision.
Topic Bankruptcy
Key Words Mechanic's Liens; Collective Bargaining Agreement
C A S E   S U M M A R Y
Facts Workers for Bentz, a company in involuntary bankruptcy, filed mechanic's liens under Indiana law to secure unpaid vacation pay owed to them. The workers were represented by a collective bargaining agreement (CBA). The bankruptcy court and district court held that if the workers were not unionized, they could file mechanic's liens, but since they were unionized, the Labor Management Relations Act (LMRA) requires that the terms of the CBA control all matters of pay, so they could not file liens not permitted by the CBA. The workers appealed.
Decision Reversed. Overturning an earlier decision on this matter, the appeals court held that the employees' claims were not preempted by the LMRA. Reference to the CBA must be made in order to estimate the vacation pay claim of the workers, but a mechanic's lien is a separate benefit provided to workers based on state policy protecting workers. This state law provision does not conflict with the purpose of the LMRA and so is allowed to unionized workers as well as non-unionized workers.
Citation In re Bentz Metal Products Co., Inc., - F.3d - (2001 WL 624863, 7th Cir., 2001)

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