If you are worried about bankruptcy negatively affecting your employment, you probably shouldn’t bother worrying. It is illegal for employers to fire someone because they filed for bankruptcy. However, the story is a little bit different if you are currently looking for a job and need to file bankruptcy. Being denied employment due to an in-progress or recent bankruptcy is not outside the realm of possibility.
Can an Employer Decline to Hire a Job Applicant Based on a Record of Bankruptcy?
According to the law, private employers may deny an applicant a position if they are in bankruptcy or recently filed bankruptcy, but public employers are not offered this same luxury. Bankruptcy code prevents governmental units (public employers) from denying employment or terminating employment due to bankruptcy. Bankruptcy Code also governs the behavior of private employers, but in a separate section.
What Protection Does the Bankruptcy Code Offer Petitioners with Private Employment?
In Section 525(b), Bankruptcy Code prohibits employment discrimination based on bankruptcy, but it does not prohibit “denying” employment to a bankruptcy petitioner. Bankruptcy code prohibits private employers from terminating employment or discriminating against someone due to bankruptcy, but there is no mention of job applicants being denied work based on bankruptcy.
Can a Private Employer Deny a Job Due to Bankruptcy?
While some may argue that a plain reading of the Bankruptcy Code seems to prevent private employers from denying employment based on bankruptcy, case law has a history of trending in the other direction. The vast majority of cases ended with courts finding that private employers are not subject to liability for denying employment.
Bankruptcy and the Job Search:
If you are considering filing bankruptcy and you are currently looking for a job, you may want to consider some practice advice. Remember that an employer’s hiring or firing decision may be based on any number of multiple factors: the applicant’s credit score, a financial history screening, experience, education, personal demeanor, etc. While an employer may have the right to deny you employment based on a record of bankruptcy, that doesn’t mean that the employer will deny you the job. The potential harm a bankruptcy can have on a job search also depends heavily on what type of job is being considered. For instance, when seeking a job as a financial advisor, it may be given more weight during the hiring process than if applying for a job as a graphic designer.
If you are avoiding bankruptcy because you fear the effect it could have on your job or job search, don’t hesitate. Call Kenneth C. Rannick P.C., Tennessee, and Georgia bankruptcy attorney. We help good people through bad times.