Private Employers Can Discriminate Against Applicants Who Filed Bankruptcy
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Appeals court rules employers can discriminate against bankrupt applicants

March 11, 2011

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Appeals court rules employers can discriminate against bankrupt applicants

The 5th Circuit Court of Appeals recently issued a unanimous ruling that upholds an employer's right to discriminate in hiring against an applicant who has a bankruptcy filing in his or her credit history.

Shani Burnett first filed her discrimination case in 2008, claiming she was offered a job as a paralegal at a Houston law firm, but that the offer was rescinded when her prospective employers discovered that she had recently filed for Chapter 13 bankruptcy, according to Reuters. The appeals court ruled that if Burnett had been applying for a public job, she may have had grounds for her discrimination claim, but since she was seeking employment with a private company, its hiring rule was not illegal.

"Overall, this is unfortunate for millions of bankrupt Americans who are very qualified people," Burnett's attorney said of the ruling. "People should be evaluated on their talents."

The news source reports that a bankruptcy attorney at the National Consumer Law Center in Boston said that employers are increasingly using credit checks in hiring, and that this has been the cause of increasingly frequent litigation. A survey revealed that most Americans would support a ban on credit checks as part of background screening for employment.

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