Aug 04, 2016
By Peter Friedmann

If you plan to file for bankruptcy or already have filed, you may be wondering if that decision will have any effect on your job.  Can you be fired or discriminated against for filing for bankruptcy?  In Ohio, the answer is no.  You cannot be fired “solely” because you filed for bankruptcy.  Your employer is also prohibited from discriminating against you concerning the “terms and conditions” of your employment because you filed for bankruptcy.  This means your employer cannot reduce your salary or demote you solely because you filed for bankruptcy.

11 U.S.C. Section 525(b)(3) provides, in relevant part, that “[n]o private employer may terminate the employment of, or discriminate concerning employment against, an individual who is or has been a debtor under this title…solely because such a debtor or bankrupt has not paid a debt that is dischargeable under this title.”  The 6th Circuit Court of Appeals addressed this issue in White v. Kentuckiana Livestock Market, Inc., where it said, “The Bankruptcy Code prohibits private employers from discharging bankrupt employees “solely” because of the employees’ having invoked the protection of the bankruptcy laws.”

In this case, a husband and wife with a joint employer filed for Chapter 7 bankruptcy.  Three days after their notice of bankruptcy was printed in the local newspaper, their mutual employer fired them.  The husband, in this case, William Lona White, had also recently requested that he be given a company car in exchange for helping his bosses falsify their income tax returns.  The employer said this was the true reason they fired the husband and argued the wife was fired because of her relationship with the husband.  After reviewing the evidence presented, the Court found that although there was evidence that the decision to terminate the couple may have been, in part, motivated by their bankruptcy, it was also motivated by the husband’s offer to falsify company tax returns in exchange for a company car.  Therefore, the reason he was terminated was two-fold and was not “solely” because he filed bankruptcy.  The husband and wife could not recover because of this.

The moral of the story here is the reason for termination must be “solely” because the employee has filed for bankruptcy.  There can be no underlying issues, such as attendance problems or insubordination.  For example, an employee who does not have any write-ups, attendance problems, or any other discipline is fired soon after the employer finds out he or she has filed bankruptcy.  Provided there are no other issues the employee is aware of, this could be a situation where bankruptcy discrimination is at play.  An employee who finds him or herself in a situation like this should always speak with an employment attorney to discuss whether or not he or she has a possible claim against the employer because each situation is different.

If you are contemplating filing bankruptcy or already have and need an attorney to represent you, consider contacting Laura Nesbitt of the Nesbitt Law Firm or Danielle Demming of Jump Legal LLC.

If you are looking for a bankruptcy discrimination attorney, please contact the Ohio Employment Lawyers at The Friedmann Firm today.