Q. I just found out that an employee filed for bankruptcy. I’m concerned because she works a cash register and has access to money. Can I fire this employee?
A. Federal bankruptcy law makes it illegal to terminate an employee or take any other adverse action because the employee filed for bankruptcy or is associated with someone else who filed for bankruptcy.
With one exception, every court that has applied this law has found that it applies only to termination decisions—not hiring decisions. Thus, employers are reasonably safe taking bankruptcy into consideration when making a hiring decision.
The still applies to how employers obtain employee credit information from third parties, including information about bankruptcies. This law affects only what employers do with the information once they get it. Unlike Title VII, this statute is narrowly written to provide that the bankruptcy must be the sole reason for the adverse action before liability attaches. This is a high standard for a plaintiff to meet.
In your case, however, you should consult with an employment attorney before firing this employee.
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