The Eleventh Circuit Court of Appeals which governs the State of Florida, recently ruled on May 17, 2011 in the case of Myers v. TooJay’s Management Corp. that private employers can legally deny employment to applicants if they filed for bankruptcy. In doing so, our Circuit is now consistent with similar rulings in the 3rd and 5th Circuits.
However, anyone who is trying to decide whether to file bankruptcy when they are job hunting should keep in mind that prospective employers will pull credit reports. Many employers will rescind offers of employment or refuse to hire a person merely because of a bad payment history. Any delinquent payments could equally affect an employment decision. Refusal to hire someone due to his or her credit history is not by itself unlawful (there may be a limitation as to whether or not a credit report may be pulled if the prospect has not signed an authorization to do so).
In fact, some employers would prefer that a prospective employee has discharged their debts. Many employers would rather not deal with creditors calling its employees during work hours on the job and don’t want the administrative headaches associated with processing wage garnishments. These employers would rather hire someone who is debt-free, instead of someone who has debt problems.
If you have a job, Section 525(b) of the Bankruptcy Act expressly prohibits an employer from discriminating against any current employee for filing bankruptcy. In my 19 years of practice both bankruptcy and employment law, I have not had any client come to me with a case where he or she was fired due to a bankruptcy filing. I once had a credit union manager threaten to fire one of my clients, but a call to the human resources department put a stop to that.
Some clients have come to me with concerns that they could be fired if they discharged debt to their employer. This also has not happened to my knowledge in any of my cases and many of our clients work for the same financial institutions where they have credit accounts.