Employers Cannot Discriminate against Applicants who have filed for Bankruptcy
July 16, 2010 at 7:44 pm #158122
Bankruptcies are a matter of public record, and my appear on an individual's credit report. The federal Bankruptcy Act prohibits employers from discriminating against applicants because they have filed for bankruptcy.July 16, 2010 at 8:06 pm #304936
Employers can discriminate against anyone for whatever reason they want: race, sex, age, credit, etc. Good luck proving any of this if you don't get the job. Especially when there are dozens, if not hundreds, of other applicants who didn't get the job.
If an employer doesn't want to hire you for whatever reason, and that reason is discriminatory, most likely that employer will not tell you the real reason why you did not get hired. I have asked dozens of possible employers why I didn't get the job, and 99% of the time it is something along these lines:
“You were very qualified, and it was a very competitive decision, however we chose to go w/ an applicant who was more qualified than you.”July 16, 2010 at 8:12 pm #304937
@financeguy- You said exactly what I was thinking. All employers discriminate; good luck proving it. Perfect example being looking at GPA or school you attended…they'll push that back on you as “finding a more qualified applicant.”July 16, 2010 at 8:55 pm #304938
financeguy, your statement is incorrect. Federal Law prohibits discrimination against age, gender, nationality, marital status and family status, even bankruptcy issues. In fact, you don't have to answer those questions in an employment application.
You are correct that employers do discriminate often and make up other excuses. These employers are playing with “fire”.
Employers have been paying out big money in lawsuits in recent years because they don't know the law well. Their human resources departments are defective in their hiring processes.
If anyone in this forum believes they have been discriminated against, then they can file a complaint with the appropriate federal agency; for age, the US Equal Employment Opportunity Commission. The EEOC will hear your case and they know very well the tactics that employers use in their discriminating hiring process. They will conduct a formal investigation against ANY employer…….July 16, 2010 at 9:04 pm #304939
Good luck investigating.
Unless the hiring manager told the applicant: “We didn't hire you because you are a woman or because you have an accent”, there is usually little ground.
One and a half year ago, I almost got a job as CFO of the US branch of one of the biggest italian food companies. Went through US CEO, group CFO over the phone. They flew me there (to Italy) to meet the old man, the one whose name is on the food boxes. I first interviewed with the group's HR Director, who asked me how old I am, my marital status, what my wife does, what my parents do.
Then I went to meet the old guy (the owner), he told me I look very young (I was 32 at the time, but I do look a good 5/6 years younger than my age). The group CFO and the US CEO were my biggest sponsors, the old guy said no because I'm too young. They told me in my face.
In Italy isn't illegal, but in the US is. And I'm talking about a huge company which everybody knows (here in the US too).
That's how it is. I probably could have sued, but I didn't want to waste time and money and ruin my name with italian companies that operate in the US (for which I'm likely to work) and be seen as a troublemaker.
I hired many people too and believe me, if I didn't want to hire the person, I would not hire him/her, whatever the reason was.July 16, 2010 at 9:12 pm #304940
italianCPA, i'm sorry to hear that you were discriminated against. What they told you is SUPER illegal in this country. In fact you should had filed a claim with the EEOC against the US division of that big company. You are NOT hiring a lawyer and there is no expense to you. The EEOC is budgeted and they conduct their own investigations under their mandate.
The EEOC knows the law well, and if they find grounds to go forward, then good luck on the employers who think they can “play it smart” against the EEOC by giving “covering” excuses…..July 16, 2010 at 9:42 pm #304941
discrimination happens daily…thousands of times daily, if not tens of thousands. The court of law is what you can prove…it doesn't matter what happened…it matters what you can convince the judge and jury of.
Anyone out there who thinks a BK will not be damaging to their career because the BK laws says you cannot discriminate against that – I'm sorry, but anyone who thinks that is simply delusional.
Some people live in an ideal world. Some others live in a realistic world. I live in a realistic world.
The only way you would even know if discrimination was the reason you didn't get the job is if the employer flat out tells you, which will usually never happen. And then the only way that you could win a lawsuit is if you could prove that discrimination…again, good luck with that.
It is flat out sad that our society has to come down to litigation over discrimination of not hiring because of a BK. I see no reason why an employer should not be able to discriminate against a BK. A business is out for 1 thing – a profit. An employer should seek the best of the best when it comes to labor, especially when there is an over abundant supply of labor. If an employer feels a BK on a persons record keeps that person out of the category of best of the best, then so be it. It is the employers decision. That is a true free market decision. I see absolutely nothing wrong with it.
A person has no control over their age, sex, race, and so I can see why discrimination against those things could be unfair. However anything fully in control of a person, such as bankruptcy, I see no reason why an employer should not have the option to discriminate against that.July 16, 2010 at 10:32 pm #304942
NJCPA2B, please be realistic. Discrimination is difficult to prove (if not impossible). Recently, I interviewed for an entry-level Tax Associate position with one of the big firms. Despite my qualifications (First degree in Accounting, Passed 4 parts of the CPA, plus a Masters degree in Taxation). How else could anybody be more qualified? But guess who did not get the job – me. Maybe because I am black and no one else who works there is black?
Friends encouraged me to sue but I backed away from lawsuit. I am still unemployed and I continue to be undeterred by such experience. You are lucky if it never happened to you and I hope it does not. It is wise, however, to prepare your mind in case of eventuality.July 16, 2010 at 10:35 pm #304943
Put your self in the hiring shoes.
You have two people that are equally qualified for the position. They are exactly the same age, race and gender. One has poor credit and recently went through bankruptcy, the other has spotless credit.
Which one would you pick?July 16, 2010 at 11:12 pm #304944
Actually maybe the one with the BK. They probably need the work and unable to declare BK again anytime soon. They are probably facing rough interviews and being discriminated against. They are probably willing to work for a lower salary and less likely to be hired elsewhere.
Everyone does not need to be a rock star. Sometimes good enough is perfectly fine.July 16, 2010 at 11:17 pm #304945
Could no history of bankruptcy be considered a BFOQ of someone in finance/accounting? I would tend to think so.
If I were a business owner, would I want the financial/tax advice of a person who could not even keep his or her own finances in order? Most definitely not.July 17, 2010 at 12:30 am #304946
Discrimination is not easy to prove, but if there are reasonable grounds the EEOC will investigate. One of our firm's client was sued and lost an $85,000 settlement on age discrimination. The gentleman 61, that did not get the job was told they selected a better qualified candidate. He filed a complaint with the EEOC based on his beliefs and the company was burned for discriminating. They messed with the wrong guy who was a seasoned professional.
The number one cause of BK is medical problems. Other reasons are divorce, unemployment and business failure. These people are not bad people and those and some are business risk takers and so on. They are probably better savy than you and I.
I have a friend, 37yo CPA professional woman who's un-insured younger brother died of brain cancer and ran-up huge medical bills on her account and savings. She then lost her corporate $150K corporate job in NY and is still looking for work. She's behind on her motgage and will probably lose her house ultimately she will have to file BK……
And therre more stories of good people who CAN NOT control the job market, lost life savings and investments, diseases, or insurance companies that won't pay medical bills……..
Don't ever think that bad things won't ever happened to you or your family……..you may not always insulate yoursefl good enough….July 17, 2010 at 1:05 am #304947
There are so many stories, and many reasons people get in a bind. I myself in my youth got into financial trouble. It took me the next 7 years to pay it off. To me a debt is something owed. I would not want a CPA that does not take ownership of their personal finances, or as a manager want to hire someone with out financial discipline.
Also if I remember right financial pressure is one of the sides to the fraud triangle.July 17, 2010 at 1:26 am #304948
I think all the state boards of accountancy/NASBA do not even take into account BK (before or after CPA licensing) as a licensing requirement. I think doing so would violate federal law.July 17, 2010 at 1:40 am #304949
An article I found puts it plainly: “While Section 525 of the U.S. Bankruptcy Code prohibits discrimination against anyone solely on the basis of insolvency, employers have a right to selectively screen individuals before hiring them, and it is difficult to prove discrimination. Their concern is a legitimate one: Individuals working in financial, government, high security, or retail occupations are more at risk for embezzlement, bribery, fraud, or robbery if they have personal money problems. Business owners may feel that the temptation to steal company funds or to become involved in fraud is just too great for individuals undergoing financial hardship.”
Which I total agree with!July 17, 2010 at 2:56 am #304950
I kinda agree with the general comments here that it is against the law to discriminate based on bankruptcy, However, it can and will prevent you from getting a government job in some areas where I work due to the sensitivity of information. There are jobs in the building where I work that required secret or top secret clearances to get and I am going to tell you that if you have a bankruptcy on your record you will not able to obtain the required clearances. Also, every applican has to pass a non-sensitive national background check and credit check prior to being hired. With the state of the economy, it would behove everyone to manage the finances appropriately. It hard enough to get a job without shooting yourself in the foot.July 17, 2010 at 3:36 am #304951
Employers can't LEGALLY discriminate, but they most certainly can discriminate.
NJCPA2B, I like your optimism, but come on. Be realistic. An employer can choose not to hire me because I'm short (I'd be average height in China). That's discrimination. Good luck to me proving it.July 17, 2010 at 7:06 pm #304952
You have passed the CPA exam and you have a Masters Degree in Taxation and you applied for an ENTRY level job. That is far more evidence why you did not get the job over anything else.
An entry level job means they want someone with low expectations, probably no real experience, and they are not going to pay them a whole lot.
Employers don't want to put someone of your educational status in an entry level job for various reasons:
1) the work may be below your expectations
2) the pay may be below your expectations
3) they may want to “mold” someone brand new. It is easier to teach something to someone for the first time rather than “unteach” something to someone
4) they may fear that you are only temporarily taking this job until you find a better one
Many, many reasons why they would not hire you. It sounds as if you have ZERO evidence of any kind of discrimination. It is an absolutely tough job market right now, and it could be any number of reasons why a person does not get a job. Jumping to your own conclusions based on no evidence is not going to help you get a job.
No offense to you but it sickens me that your friends encouraged you to file a lawsuit against this employer. I hope that your friends realize that a big reason why so many jobs are outsourced is because the USA is the most litigious country in the world. So here lies some irony: Part of the reason why you may be unemployed right now is because so many jobs have left this country in part by all the lawsuits and regulations.July 17, 2010 at 7:36 pm #304953
Financeguy has a good point. You were way over qualified for an entry level position. Years ago my then manager was interviewing for a position for our group. We were all asked to interview her and give feedback. We had an excellant lady interview, we all liked her, she looked like a good fit. He did not hire her becasue she was over qualified for the position and there was no immediate path for her progress into. He believed dhe would not be happy in the position for long. After hearing his thoughts I agreed. He did her a favor. Sometimes the reasons we don't get a position is not because of discrimination or anything wrong. Sometimes it is just a small thing that sets you apart. These days there are a lot of good candidates for each position. Say positive — you will land the one that is right for you!July 17, 2010 at 11:00 pm #304954
@onyekaz I'm with financeguy on this one– you may have been “overqualified” on paper, but whats “on paper” doesn't always determine who gets the job, it's the things you bring to the interview and what you would bring to the firm in terms of work ethic, attitude, etc. etc. Your qualifications are fantastic, and enviable, for sure. But let me play devil's advocate here….
What if they thought your interview went poorly (not saying it did, but you never know)? What if they didn't feel you were a good fit at their firm (you may have been a perfect fit, but it only takes one person with whom you interviewed to feel that way in order for them to pass on you as a candidate)? Long story short– there could be a millions reasons why you didn't get the job, or there could be just one reason. Heck, there could be no reason you didn't get the job and it was (un)luck of the draw. But you'll never know, and it's irresponsible to jump to conclusions about “discrimination.”July 18, 2010 at 3:01 pm #304955
Thanks guys for your thoughtful comments. I will keep them in mind.
With the economy in the tank as it is, I cannot help applying for jobs that I over-qualify for. Whether the employer discriminated or not, I did not get the job. And I need one. Any ideas or suggestions on who is hiring? I am in California but I am willing to relocate.July 18, 2010 at 3:08 pm #304956
I'm sure you've hit a lot of the jobs sites already available to you, but that's where I would start. Look up any large corporations with corporate offices near you…and get the contact information of the HR recruiter. Also, if you don't have a LinkedIn account, I would strongly suggest creating one and getting in touch with former classmates, colleagues, professors; they may know someone or a company who needs someone with your qualifications. Good luck!March 14, 2011 at 2:06 am #304957
I can say first hand that although the federal Bankruptcy law has code 11-525 in place to protect against discrimination of applicants who have filed, the courts have been siding with the employers for the last 12 months on their hiring decisions based on bankruptcy and the courts have been stating that this protection is stated specifically for those who are already employed but is very vague on those who are seeking new jobs. It is a loophole and I filed ch 13 in 2/2009, have prior big 4 experience, finished CPA in 2010, and not one employer will touch me once they run the background check I authorize during the interview. 10 times since January, I have been declined an offer. Yes, sometimes it is due to qualifications, or not being a right fit. But after a round 3 interview and then I see the inquiry by the prospective employer on my credit report, and then get a nice decline letter just stating that they have decided to seek other applicants.
Be very careful in your decision to file. Your bankruptcy lawyer will absolutely tell you that employers can not discriminate, and it was one of my key questions to my lawyer during the filing process. Either way, the lawyer is gonna get their $5,000 fee through trustee payments, so of course they are going to tell you what you want to hear, not what is really happening, which is discrimination being secretly disguised as qualification issues.April 8, 2011 at 10:51 pm #304958
I have a very big dilemma. I have a large credit card debt on top of my student loan. All of it has been charged off by creditors as bad debt and turned over to collection. I accepted a job offer from a Big 4 firm several months ago as a campus hire. They saw negative marks on my credit report and asked for an explanation. At the time, my accounts were past due but not charged off yet. I was scared to bring up a possibility of bankruptcy in my letter, so I said I would be able to settle my debt for less than full balance and would be debt free by Fall when I start my employment. That was my true intention. I was cleared.
Now, after settling only one account so far, I'm in a position where bankruptcy is looking a much better option for me financially. But I'm afraid it would cost me the job. I'm pretty sure the employer will run another credit check when I start and find out that my accounts have been charged off even if I don't file for bankruptcy. What should I do? Can I ask the recruiter if bankruptcy is an option? Will Big 4 or any other CPA firm refuse to hire me with a bankruptcy mark on my credit report? ;-(April 9, 2011 at 8:39 am #304959
So employers can “discriminate” if you have bad credit, but can't discriminate if you have a bankruptcy? I guess I don't really understand the law…I know that bad credit, legally, does keep people from getting offers. Isn't a BK the worst type of “bad credit”?
This isn't a judgment on anyone. Bad credit/BK's happen because of medical debt, layoffs, divorce etc. I guess I just want to understand the law…April 9, 2011 at 1:52 pm #304960
hmm this post doubled ^_^April 9, 2011 at 1:58 pm #304961
Sorry about your situation, but I think since you got past the initial screening, you might be safe.
The potential employers out there don't care what kind of situation you are in to fall into bad credit/bankruptcy. They don't know you but they look at your credit report and see you as irresponsible and a dead beat. Why should I hire you to “protect the public” if you can't even handle your own finances or pay bills on time? The firms believe those with mountains of debt/bad credit/bankruptcy looming over their heads are more likely to commit illegal acts based on pure desperation. Of course they will never say so and they will say somethign else like “We think you are not the right fit for this company” or “we went with another candidate with stronger background” You can sue them if you want for discrimination but how's that going to look on your public record as a “trouble maker” making you even more untouchableApril 9, 2011 at 3:01 pm #304962
Be careful with declaring personal bankruptcy. A friend of mine did so in his late 20s. He's completely reformed in the past 20 years since, paying all bills on time. He's tried, time and time again, to apply for random credit cards, even store credit cards, and has been rejected every time.
For plastic, he uses bank debit cards or credit cards under his company name, or he pays in cash.April 10, 2011 at 3:18 am #304963
jelly, if your friend declared BK 20 years ago, then there would be NO record of the BK after 7 years. After 2005, it's 10 years. So your friend should request the credit bureau to remove the BK out of his credit because it's way past due…
CPApal, a BK wipes out all the negative lates and balances owed. So a BK may look cleaner on your credit than a bunch of bad crap…..but if you only have a little bad crap then it would be better to negotiate the bad crap… Also, you can rebuild your credit soon after a BK, you can have a FICO of 700+ 2 years after a BK….., but bad credit looks bad on your credit report because they report lates then charge-offs which then could lead to judgments…and that's uglier than a BK……..Employers know that a BK you're clean and don't have to worry about you stealing money to pay credit cards and judgments..April 10, 2011 at 6:03 pm #304964
I agree with Herbie…do you really want future employers to know that you've sued? They'll think you'll probably end up suing them, and pass. It's a lose-lose. Also, I did hear that judges have ruled against a couple of claims in 2010 that had people suing for this exact reason.
Check out Rae vs Federated Investors (a 3rd circuit appeals court upheld the ruling):
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