Mass. Bankruptcy Attorney – Employment discrimination after bankruptcy?

March 18, 2010

By Bankruptcy Attorney, Kara O’Donnell, Esq.
Quincy, Massachusetts

A common question I am asked by bankruptcy clients (or potential ones) is whether they could a) lose their job if their employer learns they filed for bankruptcy or b) could they be discriminated against when they apply for jobs because of the bankruptcy filing?

11 U.S.C. Section 525 of the bankruptcy code prohibits termination or discrimination with respect to employment solely because the individual is bankrupt. However, it is difficult to prove that the bankruptcy is the “sole” reason for the termination or the discrimination.

It can be a rather high burden of proof to meet. Why? Because employers are reluctant to admit or put into writing that they terminated an employee (or refused to hire a candidate) solely because of a bankruptcy filing.

That being said, a bankrupt employee can take measures to protect himself. Keep track of downgrades in performance evaluations and other efforts that employers use to create a file on you to back up their termination. Employment discrimination is usually subtle and, in employment-at-will states, such as Massachusetts, employers can use just about any reason to terminate you (so long as it is not based upon protected classes ex: race, gender, religion, etc.)

Bankruptcy filers can keep records of their employers’ actions if they believe that a) their employer knows they filed for bankruptcy and b) they might get fired or demoted for it. If fired, contact an attorney.

Kara O’Donnell, Esq.
Quincy, Massachusetts

Posted by Kara O’Donnell


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