Posted On November 20, 2018
How Will Filing Bankruptcy Impact My Job?

How Will Filing Bankruptcy Impact My Job?

Nevadans who file for bankruptcy may be concerned about the potential impact on their jobs, but there are anti-discrimination provisions in the Bankruptcy Code that prohibit employers from terminating employees based on their filing petitions for bankruptcy. However, it can be difficult to prove that the employers terminated the workers because of their bankruptcy petitions. Government employers may not deny employment to an applicant because he or she has filed for bankruptcy. However, there is not a corresponding prohibition that prevents private employers from doing so.

Termination Based on Bankruptcy

Federal law prohibits both government and private employers from firing workers because they have filed for bankruptcy. Employers are also prohibited from firing workers who are insolvent prior to bankruptcy discharges. They also may not terminate workers who have not paid debts that would be dischargeable through bankruptcy.

While the prohibition against termination based on bankruptcy exists, it may be difficult for workers to prove that their employers fired them because of their bankruptcy cases. Gathering evidence that an employer has engaged in a pattern of discriminatory conduct and terminations of employees who have filed for bankruptcy will help support a case.

Denying Employment Based on Bankruptcy

Government employers are not supposed to deny an application on the basis that the applicant filed for bankruptcy. A similar prohibition is not included for private employers, however. A private employer might be able to deny an applicant because he or she has filed for bankruptcy. However, employers are allowed to deny applications on the basis of other factors that could have contributed to the bankruptcy. For example, an employer may ask applicants for permission to check their credit and deny the applications if the applicants refuse to sign the authorization forms. Private employers are also allowed to base their hiring decisions on such factors as gambling problems, substance use, credit histories, and others that may be related to the reason for filing for protection under the bankruptcy code.

Will Employers Learn About the Bankruptcy?

If people file for bankruptcy protection under Chapter 7, their employers are unlikely to know. Few people understand how to check the bankruptcy filing records. If they file for Chapter 13 bankruptcy, their employers may receive garnishment orders. However, some courts will allow employees to avoid garnishments so that their employers won’t be notified.