The Law You Should Know
Finding a job has never been harder. Concerns about employment discrimination can be very important during the job hunt. If you are looking for a job or have a job and are experiencing financial problems which may cause you to file bankruptcy, here is the law you should know.
1. A private employer may have the right to discriminated against a prospective employee based on a prior bankruptcy filing. There is a split on authority on this issue. The 9th Circuit which includes California has held that a prospective employer did not violate the Bankruptcy Code Protection against discriminatory treatment as specified in 11 USC 525 unless the Debtor’s bankruptcy status was the sole reason for denial of employment. Comeaux v. Brown & Williamson Tobacco Co., 915 F.2d 1264 (9th Cir. 1990) In the Comeaux case, the employer ran a credit check and decided not to hire the employee and thus the bankruptcy file was not the “sole” reason for the decision not to hire. On the other hand, the 3rd Circuit and the majority of courts that have considered this issue have held that a private employer has the right to discriminated against a prospective employee based on a bankruptcy filing. Rea v. Federated Investors, 627 F.3d 937 (3d Cir. 2010). There is no time limit on asking although it will only show on a credit report for 10 years from the date of the bankruptcy filing.
2. A private employer cannot terminate or discriminate with respect to a current employee solely because an individual has been a debtor under the Bankruptcy Code. However, the Bankruptcy Code does not prohibit an employer from terminating a current employee because they default on a loan usually a loan with the employer. It is an open question of whether a private employer can terminate an employee when the employee was not on notice of a termination provision when the loan was made to the employee. 11 USC 525(b)
3. The government whether a city, county, state or federal government or any unit thereof, may not deny, revoke, suspend or refuse to renew a license, permit, charter or deny employment, terminate the employment of, or discriminate with respect to any prospective employee solely because he/she is or has been debtor under the Bankruptcy Code. The governmental provision is much broader than the private employers because 525(a) added the phrases “deny employment to” as a prohibited act.
In conclusion, the only safe harbor protection against bankruptcy discrimination in employment appears to be working for the government. Since we can’t all work for the government, a decision to file bankruptcy needs to be made very carefully if you are seeking employment or are currently employed by an employer who routinely runs credit checks on employees or who makes loans to employees.
If you work for an employer where you have a loan, it may be better to file bankruptcy prior to a default since the Bankruptcy Code provides protection from termination solely because of a bankruptcy filing. On the other hand, if you know a prospective employer will be asking about your financial situation and any prior bankruptcy filing, it may be better to delay the filing and explain the reason for the financial problems. This is a complicated area of the law and any decision to file bankruptcy or delay the filing, should not be made without legal advice. I see people every day for a free 30 minute consultation at my offices located in Walnut Creek, Antioch and Brentwood.
WE ARE A DEBT RELIEF AGENCY. WE HELP PEOPLE FILE BANKRUPTCY RELIEF UNDER THE BANKRUPTCY CODE. THIS INFORMATION IS NOT PROVIDED AS LEGAL ADVICE AND SHOULD NOT BE RELIED UPON IN MAKING ANY DECISION REGARDING A VOLUNTARY DEFAULT, SHORT SALE, FORECLOSURE OR BANKRUPTCY. THIS INFORMATION IS NOT A SUBSTITUTE FOR OBTAINING TAX & LEGAL ADVICE REGARDING AN INDIVIDUAL SITUATION. GRIMESBK.AW.COM
© 2011 Joan Grimes