Wednesday Federal Employment Law Update- Bankruptcy Discrimination

Good afternoon all, and welcome back for your federal employment law update!  As someone who handles a lot of employment litigation, I have gotten a number of calls over the years by disgruntled employees or former employees who wish to consult with an attorney about a potential lawsuit against their employer.  They tell me their stories, which usually are quite compelling in terms of unfair treatment.  They usually are able to single out one person who “has it in for them.”  Then I have to come to the difficult questions and the answers and the discussion is normally something like this:

Q.  Do you think the supervisor has it in for you because you’re a male?

A.  Well, no.

Q.  Do you think the supervisor has it in for you because you are Hispanic? 

A.  No, she’s Hispanic and most of our employees are Hispanic.

Q.   Do you think the supervisor has it in for you because of your religion?

A.  No not at all I think we’re both Christian. 

Q.  Has she made any type of sexual overtures toward you?

A.  No of course not.  She just doesn’t like me, ok?  She’s totally unfair to deal with. 

At this point I have to remind these would-be clients that generally speaking, being a jerk of a boss is not illegal.  You need to mistreated because of your membership in a protected class (gender, age, race, religion, etc.) to be able to prevail on a claim under employment statutes like Title VII. 

In today’s case of Myers v. Toojay’s Management Corp., 2011 WL 1843295 (May 17, 2011), we learn about a class of discrimination claims that even I was not aware of — bankruptcy discrimination.  In Myers, Plaintiff was on the verge of obtaining a management position at a Toojay’s deli.  Though he passed all the training procedures and received a job offer, Toojay’s later rescinded the offer before it was accepted after it learned from a credit report that Plaintiff had previously filed for bankruptcy. 

Plaintiff sued under Section 525 of the Bankruptcy Code, which disallows public employers to “deny employment to, terminate the employment of, or discriminate with respect to employment against” a person who is or has been in bankruptcy.  The section further disallows private employers to “terminate the employement of, or discriminate with respect to employment against” those in bankruptcy or who have been in bankruptcy.

Despite the apparent broad language of “discriminate with respect to employment” found in the private employer section, the Eleventh Circuit Court of Appeal affirmed summary judgment for Toojay’s, stating that the section’s omission of the “deny employment to” language found in the section relating to public employers was a clear indication by Congress to distinguish public from private employers.  Accordingly, if you work for a private employer, they cannot fire you because they find out about you being in bankruptcy, but they can refuse to hire you on that basis.  I have a tough time explaining the logic of that distinction, but I’m also not sure I agree with any restrictions on an employer’s right to consider an employee’s credit issues.  Tough issue, and I welcome your thoughts!


THE COMMENTS ON THIS BLOG DO NOT CONSTITUTE LEGAL ADVICE.  NOR DO THEY CREATE AN ATTORNEY-CLIENT RELATIONSHIP.  They are provided for informational purposes only.  Actual legal advice can only be provided after consultation with an attorney licensed in your jurisdiction.
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