In tough economic times, people who lose their jobs often have to file for bankruptcy. But some employers frown on bankruptcy and don’t want to hire someone who can’t pay his or her bills. Now the 5th Circuit Court of Appeals has ruled that a private employer is free to turn down an applicant because he or she filed for bankruptcy.
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Under limited circumstances, a job applicant might be able to win a discrimination lawsuit without actually applying for a job. For example, someone could conceivably prove that it would have been be futile to even bother filling out an application. Fortunately, such cases are rare.
Employers operate in an increasingly complex legal environment, made all the more difficult by the tough economy. Hiring has emerged as a particular trouble spot. You need to hire and maintain a skilled and productive workforce, but you must watch out for legal liability that can surface in the process.
Have you ever thought of not hiring an applicant because he or she had previously declared bankruptcy? Maybe you thought that was discriminatory. But a court last month said, “Don’t worry.” Private employers won’t violate the U.S. Bankruptcy Code if they refuse to hire. But firing based on bankruptcy status is another story …