In the 1941 case of Meilink, Trustee in Bankruptcy v. Unemployment Reserves Commission of California, the Supreme Court dealt with a dispute over unemployment compensation funds. The petitioner was a bankruptcy trustee for an insolvent company and sought to recover contributions made by the bankrupt employer to California's unemployment fund within three months before filing for bankruptcy. The trustee argued that these payments were preferential transfers under Section 60b of the Bankruptcy Act and should be returned to form part of the bankrupt estate. The court disagreed with this argument, ruling that such payments did not constitute preferences because they were not made while insolvent or on account of an antecedent debt as required by Section 60b. Furthermore, it held that even if they could be considered preferences, they would still fall under exceptions provided in Section 64b(7) which prioritizes statutory obligations imposed upon employers for employee benefits. Therefore, according to this decision from Justice Reed (who wrote majority opinion), state-mandated contributions towards unemployment reserves are protected from being clawed back into a debtor’s estate during bankruptcy proceedings.

In the dissenting opinion for Meilink v. Unemployment Reserves Commission of California, Justice Frank Murphy argued that the majority's decision was a misinterpretation of both federal and state law. He contended that under the Bankruptcy Act, wages due to workers should be given priority over other claims in bankruptcy cases. Furthermore, he asserted that this principle is also reflected in California's unemployment compensation law which aims to protect employees' rights to their earned wages even when their employers go bankrupt. Therefore, according to Justice Murphy, it was incorrect for the court majority to rule against giving wage claim priority status in this case as it contradicted established legal principles designed specifically for such situations.