3 Ways Employers Are Barred by Discriminating Against Bankruptcy Debtors

One fear people who are considering filing bankruptcy in Las Vegas have is how their employer will treat it. For example, they fear that their employer might terminate them because they are bankruptcy debtors. Fortunately, the Bankruptcy Code contains provisions (11 USC § 525) that prevent employers from doing just that. Government units, cannot:

  • “Deny, revoke, suspend, or refuse to renew a license, permit, charter, franchise or anything similar” to anyone who has filed bankruptcy. They also can’t condition renewals based on the bankruptcy either. The scope of the statute is so broad that it even protects people who “associate” with those who filed bankruptcy.
  • “Deny employment to, terminate the employment of, or discriminate with respect to employment against” anyone who files bankruptcy or associates with a debtor.

Private entities are barred from the same behavior too. They cannot:

“Terminate the employment of, or discriminate with respect to employment against,” anyone who has filed bankruptcy, or even anyone who has not paid a debt that was discharged in bankruptcy.

There are subtle differences between what government employers and contracting authorities can do and what private sector actors can do. The government cannot “deny employment to” anyone who has filed bankruptcy, but that restriction does not apply to private sector employers. As a result, private sector employers cannot fire people because they filed bankruptcy, but it can choose not to hire people based on a previous bankruptcy filing. This is likely due to Congress’ belief that there might be some positions in which people who have filed bankruptcy might not be suitable. Whether it’s true that someone who files bankruptcy is a risk for a business is unproven, and it’s arguable that someone who has discharged their debts is a lot more trustworthy than someone who has large debts that they cannot manage.
Another point about private employers is that they aren’t allowed to terminate workers who do not pay on a discharged debt. The goal here is to prevent retaliatory firings by employers to employees who may have discharged debts that they owed to their employers.

If you discharged your debts and an employer fired you as a result, you have a cause of action against the employer, even if it’s a government entity. It’s worthwhile to call an experienced bankruptcy lawyer to reopen your case to help you get your job back.

For more questions about bankruptcy in Las Vegas, please feel free to contact an experienced Haines & Krieger Las Vegas bankruptcy attorney for a free initial consultation. Call us at 1-702-880-5554 to set up your free consultation.

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