Bankruptcy Employment Discrimination Louisville Kentucky Attorney

Nick C. Thompson Louisville Kentucky Attorney

Employment Discrimination:   A U.S. District Court held that 11 USC 525(b) does not forbid a private employer from employment discrimination in job applications and hiring.  525(b) prevents employment discrimination against current employees, but the unique wording allows employment discrimination in the hiring process.

In Rea v. Federated Investors, 2010 WL 370334 (W.D.Penn. Jan. 29, 2010), the debtor filed bankruptcy in 2002.  Federated offered to hire him at $80,000 per year in 2009 but he had to pass a criminal background and credit check.  He was informed his Chapter 7 was a “deal breaker.  He sued, claiming  discrimination requesting damages for lost wages and emotional distress.  The U.S. district court dismissed the claims, stating that  525(a) addresses governmental employer discrimination, and that  525(b) addresses private employer discrimination.  525(a) and (b) reads as follows:
(a)  a governmental unit may not . . . deny employment to, terminate the employment of, or discriminate with respect to employment against, a person that is or has been a debtor under . . . the Bankruptcy Act  
(b) No private employer may terminate the employment of, or discriminate with respect to employment against, an individual who is or has been a debtor under this title, a debtor or bankrupt under the Act, or an individual associated with such debtor or bankrupt, solely because such debtor or bankrupt— (1) is or has been a debtor under this title or a debtor or bankrupt under the Act; (2) has been insolvent before the commencement of a case under this title or during the case but before the grant or denial of a discharge; or (3) has not paid a debt that is dischargeable in a case under this title or that was discharged under the Bankruptcy Act.

While section 525(a) forbids a governmental employer from discrimination from denying positions based upon filing Chapter 7 or Chapter 13,  section 525(b) forbids a private employer from terminating or discriminating based on filing Chapter 7 or Chapter 13.  The phrase “deny employment to” was found in section 525(a) but not in section 525(b).  The court reasoned Congress must have had a reason for omitting this phrase from section 525(b).  Accordingly, private employers are allowed to discriminate in hiring.   See our law office website to understand how to file Louisville Kentucky Bankruptcy Attorney or Indiana Bankruptcy Attorney