A recent court decision allowing private companies to deny employment solely because of a past bankruptcy filing is a step in the wrong direction.
In the bankruptcy discrimination lawsuit, Eric Myers alleged that TooJay’s had discriminated against him because of his bankruptcy by refusing to hire him, and alternatively, by firing him after being hired. According to the lawsuit, Myers interviewed for a managerial position at TooJay’s and spent two days in an on-the-job evaluation, after which he reportedly signed a number of documents, including a W-4 and I-9 form. Allegedly, the manager then made him an unconditional offer of employment and discussed salary, hours and his start date. The manager denied these allegations, and expressed that the plaintiff was aware that the job offer hinged on a background check. After providing two weeks notice to his previous employer, Myers received an adverse action letter from TooJay’s stating that the offer of employment was revoked based on information provided in a consumer report.
It’s important to note that government entities cannot discriminate against job candidates or employees of a bankruptcy filing and private companies cannot fire an employee because of bankruptcy. However, there seems to be a trend present where courts are supporting a private company’s right to not hire a job candidate simply because they filed bankruptcy. First of all, it is a shame that any employer is basing their hiring decisions on a past bankruptcy filing without considering the full value of the potential employee. This type of thinking is based on the flawed idea that bankruptcy debtors are somehow less honest, trustworthy or responsible. But that is a flawed assumption and is so far from the truth.
The reality is that a bankruptcy debtors file bankruptcy for many different and very valid reasons – lost employment, illness or because some other crisis has made it impossible to pay their debt. Refusing to hire a debtor because of their bankruptcy filing actually undermines the fresh start premise on which bankruptcy is based.