[Congressional Record Volume 155, Number 138 (Tuesday, September 29, 2009)]
[Extensions of Remarks]
[Page E2396]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




              EMPLOYER-OWNED LIFE INSURANCE LIMITATION ACT

                                 ______
                                 

                         HON. LUIS V. GUTIERREZ

                              of illinois

                    in the house of representatives

                      Tuesday, September 29, 2009

  Mr. GUTIERREZ. Madam Speaker, I rise today to announce the 
introduction of my bill, the ``Employer-Owned Life Insurance Limitation 
Act.'' Every employee makes a commitment to his employer. He commits 
time, energy and creativity to the advancement of the company.
  However, instead of making a commitment to their employees--their 
health, education and wellbeing--many companies are gambling on their 
lives by taking out employer-owned life insurance policies in which the 
company is the only beneficiary. The family and loved ones of a 
deceased individual should be the only beneficiaries of a life 
insurance policy, not a speculating company.
  As highlighted in Michael Moore's new film, ``Capitalism: A Love 
Story,'' a corporation is allowed to take out life insurance on its 
employees--often without their knowledge or consent--and cash in, in 
the event of their death. These policies are being taken out on 
everyone from the CEO to the janitor, and the only beneficiary of these 
countless policies is the company itself.
  Every day, 14,000 people in this country lose their health insurance; 
but instead of investing in the health, life and longevity of its 
employees, much of Corporate America has adopted the practice of 
investing its resources in the demise of its employees. My legislation 
would prohibit the practice of taking out employer-owned life insurance 
except in the case where the death of an individual would incur a 
significant cost to the company--that is individuals making $1 million 
or more in salary.
  In addition, this legislation would require that the company disclose 
the policy to the covered individual within 30 days of taking out the 
policy. Also, should the employee move on to another job, the employer 
would have 30 days to cancel the policy. This will stop the practice of 
taking out policies without an employee's knowledge and maintaining the 
policy long after the employee has left the company.
  Employees who find that their employer has taken out a policy in 
violation of this legislation would have the right to bring civil 
action against their employer to stop the company from holding the 
contract. Additionally, the employee could be awarded damages amounting 
to either $500,000 or, in the case of a deceased employee, three times 
the amount of the benefit paid to the employer. In the case of a living 
employee, the employee would be awarded three times the benefit as it 
exists on the date of action, whichever is greater.
  I believe that taking out employer-owned life insurance policies on 
non-executive level employees is criminal, and my legislation would 
punish it accordingly by establishing such a violation as a misdemeanor 
punishable by a $500,000 fine and imprisonment for up to one year.
  This legislation would also commission a GAO study to examine the 
prevalence of these policies and the number of violations under this 
bill to ensure that we have the most accurate information on this 
practice.
  Madam Speaker, each year companies spend $8 billion in premiums on 
these policies. That is $8 billion that could be directed toward 
employee healthcare, pensions and educational opportunities. Instead, 
it goes to what is essentially a game of Craps, where an employer is 
betting and banking against the employee's life.
  I ask my colleagues to join me in eliminating this unjust practice.

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