Can I Be Refused Employment If My Prospective Employer Discovers I Have Filed Bankruptcy?
After just receiving your discharge and your fresh start in bankruptcy, you find yourself wanting to better your career options and find a new job. With the burden of debt off of your back, you cannot wait to start your life anew and find a better future. In response to a job posting, you take your resume and interview for a job at a local private company. The interview goes great and the company represents that they intend to hire you after you pass a small background check. With no criminal background to speak of you believe you have this new job in the bag.
Then the interviewer calls with some bad news. They state that they are rescinding the position offer due to the fact that your past bankruptcy filing showed up in the background check.
Is this legal? Can private employers refuse to hire you because of a past bankruptcy? The unfortunate answer to this appears to be yes based on recent opinions by Courts of Appeals throughout the country. Bankruptcy discrimination in the private sector is allowed under these circumstances.
11 U.S.C. § 525 provides protections against discriminatory treatment by proscribing government entities from both denying employment to persons based on the fact that they had a past bankruptcy and from terminating an already existing position based on a bankruptcy filing.
There are also terms in the law against prohibiting private employers terminating the employment of an individual’s already existing job based on the fact that they have filed a bankruptcy during employment. However, as interpreted by the aforementioned Courts, the law does not prohibit a private employer from refusing to hire based on the fact that the prospective employee has filed a bankruptcy.
In conclusion, based on recent case law opinions interpreting 11 U.S.C. § 525, it appears as though private employers are allowed to discriminate against persons who have filed bankruptcy by refusing to hire them. At this point, it seems as though an opinion from the Supreme Court will be the only way to turnover this interpretation.