Monday, March 21, 2011

5th Circuit Joins 3rd Circuit in Holding Private Employers May Reject Applicants Based Upon Bankruptcy Filing

At the very end of last year the Court of Appeals for the Third Circuit in Rea v. Federated Investors, No.2 -09-cv-01205 (3d Cir. Dec. 15, 2010) held that Section 525(b) of the Bankruptcy Code cannot be read broadly to prohibit private employers from denying employment based on past or present bankruptcy. Following suit (no pun intended), the Court of Appeals for the Fifth Circuit has now also held that private employers may discriminate against job applicants based on their bankruptcy history. The case is Shani Burnett v. Stewart Title, Inc., No. 10-20250.

While it's not looking good for individuals in the private sector who have filed for bankruptcy--at least in the 3rd and 5th Circuits--it is worthy to note that the Equal Employment Opportunity Commission ("EEOC") maintains that it will prosecute if it finds that such hiring discrimination has a disparate impact on protected classes of people, just like with credit history which is also not specifically protected by statute. Perhaps it is simply time for such specific statutes to protect such statuses.

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