A recent decision by a federal appeals court is a setback for the rights of people who have filed for bankruptcy protection. The Court of Appeals for the 5th Circuit (which does not include Florida) ruled that a private company could refuse to hire a job candidate because the candidate had filed for bankruptcy.

The case hinged on a statute that was intended to protect people who have filed for bankruptcy from facing workplace discrimination. The court ruled that the protection against discrimination in hiring applies only in the public sector, and does not apply to private companies.

The 5th Circuit case stemmed from a job offer that was made by a title company. They offered a paralegal job to a woman as long as she underwent a background check and passed a drug test. She did, but the title company rescinded its offer on the basis that the woman had filed for bankruptcy protection the year before.

The woman sued on the basis of a 1984 federal law that bars private companies from discriminating against employees because of their bankruptcy history. The court said the law did not apply to hiring. Even though there is a law that prohibits public sector employers from refusing to hire a person because they have filed for bankruptcy, the court said it did not apply to private companies.

Fort Lauderdale bankruptcy attorneys are disappointed by the ruling, and note that a similar case is pending in the 11th Circuit, which includes Florida.

The same issue is being litigated frequently across the country as more employers have begun to use credit checks as part of their hiring process.

Source: Westlaw News & Insight "Appeals court rules against job seekers who file for bankruptcy" 3/9/2011