Bankruptcy Past Can Play a Role in Private Hiring | Courthouse News Service
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Bankruptcy Past Can Play a Role in Private Hiring

(CN) - Private companies can refuse to hire prospective employees if those applicants have filed for bankruptcy, the 5th Circuit ruled in affirming a bankruptcy court and District Court's findings.

While the government is legally prohibited from refusing to hire someone based on their bankruptcy status, private employers do not face the same standard, a three-judge appellate panel ruled on March 4.

Shani Burnett filed suit against Stewart Title in 2008 for rescinding its employment offer when it discovered during a background check that she had filed for bankruptcy less than a year earlier.

In her lawsuit, Burnett said Stewart Title used her bankruptcy status to unlawfully discriminate against her. Stewart Title filed a motion to dismiss, which a bankruptcy court granted, and the Southern District of Texas affirmed. She then appealed her case to the New Orleans-based 5th Circuit.

Writing for the unanimous court, Judge Carolyn King noted that Burnett's case hinges on a section of federal bankruptcy code that provides separate standards for government and private employers.

A provision of that law says the government cannot "deny employment to, terminate the employment of, or discriminate with respect to employment against" a person who has filed for bankruptcy. But the wording for private employers is slightly different. That section states: "No private employer may terminate the employment of, or discriminate with respect to employment against" a person who filed for bankruptcy.

Burnett argued that the court should interpret "discriminate with respect to employment against" as meaning denying employment, but the appeals judges said they could not adopt that view when reading the statute as a whole.

"Where Congress includes particular language in one section of a statute but omits it in another section of the same Act, it is generally presumed that Congress acts intentionally and purposefully in the disparate inclusion or exclusion," King wrote, quoting the 1983 Supreme Court decision, Russello v. United States.

Congress deliberately decided to omit "deny employment to" from the bankruptcy code provision for private employers, while including the prohibition for government employers, the decision states.

If the wording had been used in error, Congress had an opportunity to fix the wording twice when amending the statute in 1994 and 2005, King pointed out.

Though Burnett argued Congress would not have intended to let private employers discriminate where government employers could not, the judges said their hands were tied.

"This is a policy argument best made to Congress, which intentionally and purposefully drew a line prohibiting governmental units, but not private employers, from denying employment to persons based on their status as debtors in bankruptcy proceedings," King wrote.

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