The Eleventh Circuit Court of Appeals has followed other courts (notably, the Fifth Circuit, as discussed here) in affirming the right of a private employer to deny employment based upon the applicant’s filing of a bankruptcy petition.
In Myers v. TooJay’s Management Corp., No. 10-10774 (11th Cir. May 17, 2011) (click here for the .pdf of the opinion), the plaintiff applied for a job at Defendant’s TooJay’s Gourmet Deli restaurant. As part of the hiring process, the plaintiff worked at the deli for two days, for $100 per day, for an "on the job evaluation." At the conclusion of the evaluation period, the plaintiff was never actually offered employment and, according to the defendant, he was notified that permanent employment would be based on a background check. The plaintiff was subsequently denied employment based upon information in the background check. The evidence indicated the decision was based upon the plaintiff’s bankruptcy filing. The plaintiff then filed a lawsuit, contending that he was actually hired and then was terminated in violated 11 U.S.C. §525 or, alternatively, he was denied employment in violation of the statute.
Section 525 of the Bankruptcy Code provides the following (applicable to private, non-government employers):
(b) No private employer may terminate the employment of, or discriminate with respect to employment against, an individual who is or has been a debtor under this title, a debtor or bankrupt under the Bankruptcy Act, or an individual associated with such debtor or bankrupt, solely because such debtor or bankrupt–
(1) is or has been a debtor under this title or a debtor or bankrupt under the Bankruptcy Act;
(2) has been insolvent before the commencement of a case under this title or during the case but before the grant or denial of a discharge; or
(3) has not paid a debt that is dischargeable in a case under this title or that was discharged under the Bankruptcy Act.
The Court affirmed the jury’s conclusion that the plaintiff was never an employee of the defendant, and thus the termination prohibition never came into play. With respect to the claim for a denial of employment, the Court followed the Fifth Circuit in Burnett and other courts and held that §525does not prohibit the denial of employment by a private employer. The Court followed the reasoning of the District Court, which stated the following:
A comparison of the words used in subsections (a) and (b) demonstrates that subsection (a) prohibits government employers from “deny[ing] employment to” a person because of his or [her] bankrupt status, whereas subsection (b) does not contain such a prohibition for private employers. Rather, the private sector is prohibited only from discriminating against those persons who are already employees. In other words, Congress intentionally omitted any mention of denial of
employment from subsection (b), but specifically provided that denial of employment was actionable in subsection (a). Thus, by its plain language, the statute does not provide a cause of action against private employers for persons who are denied employment due to their bankrupt status. “Where Congress has carefully employed a term in one place but excluded it in another, it should not be implied where excluded.
This opinion, as well as the other opinions interpreting this statute, as well as the plain language of the statute itself, strongly indicate that any prohibition against the denial of employment by a private employer is a matter for Congress.