A case from the Court of Appeals for the Eleventh Circuit once again addresses the question of whether a private employer can deny a job applicant a position based upon the applicant’s personal bankruptcy filing. We previously reported
on a similar case decided by the Court of Appeals for the Third Circuit.
In Myers v. Toojay Management Corp., a job applicant sued his potential employer alleging that the employer refused to hire him on the basis of his bankruptcy, and, alternatively, terminated his employment on the basis of his bankruptcy. Notably, the plaintiff in this matter worked for the employer for two days as part of an on-the-job evaluation before the employer pulled the plug on his employment. During that period, the candidate authorized a background check and was told that his employment was expressly conditioned on its results.
The District Court granted summary judgment to the employer finding that a refusal to hire plaintiff on the basis of his bankruptcy did not constitute discrimination. Following a trial on the termination claim, the jury found that plaintiff was never an employee of defendant. Accordingly, there was no basis for a claim that his termination was discriminatory.
The Eleventh Circuit agreed with the findings below, focusing on the failure to hire claim. Specifically, the Court of Appeals focused on the express language of the Bankruptcy Code, 29 U.S.C. § 525(b), which provides that a private employer may not “terminate the employment of, or discriminate with respect to employment against” an individual who is or has been in bankruptcy based on that ground. This section does not prohibit an employer from denying employment on such basis. Notably, express language in 29 U.S.C. § 525(a) prohibits public employers from doing just that.
This decision makes it clear that an employer cannot terminate or discriminate against a current employee based upon the employee’s status as a debtor under the United States Bankruptcy Code. However, employers may decide not to hire an applicant for a position based upon his status as a debtor. Employers should consult with counsel to ensure that any decision based upon information on a credit check complies with not only federal bankruptcy law and the Fair Credit Reporting Act but applicable state law.