Throughout most of the country, including Northeastern Pennsylvania, Luzerne County, Wilkes-Barre, Scranton, Hazleton and Stroudsburg, employment is considered to be “at will,” meaning that, without a written agreement, employers may hire and fire employees at whim, and employees may quit their employment, with or without any notice. However, employers may not terminate an employee or take any other negative employment action based upon the employee’s age, disability, gender, martial status, national origin, race, religion and sexual orientation.

The Bankruptcy Code also protects against employment discrimination, to some extent.

Under a provision of the Code, a private employer cannot terminate or discriminate against an employee who files for bankruptcy, who is insolvent, or who fails to pay a debt. A governmental employer cannot do so either and cannot discriminate in hiring because the candidate files for bankruptcy, is insolvent, or  fails to pay a debt. The prohibition against discriminating in hiring does not apply to a private employer.

This provision of the Bankruptcy Code was added to codify a Supreme Court decision which held that bankruptcy discrimination would frustrate the purpose of the bankruptcy law itself. Insuring that people going through the bankruptcy process are able to maintain employment–and thereby avoid future bankruptcy–was considered very important.

To bring a bankruptcy retaliation claim, the debtor must have sufficient evidence to show that the sole reason for the adverse employment action was his or her bankruptcy status. This is an important distinction between this and other discrimination laws requiring only that the protected classifications be a motivating factor for the negative employment action.

Individuals who have been the victim of unlawful bankruptcy discrimination may receive back pay, including fringe benefits and reinstatement, They may also recover damages for emotional distress. However, unlike other discrimination laws, they cannot recover attorney’s fees or other costs. This can be a significant deterrent to pursuing such a claim.

If you have confronted discriminatory treatment or wish to discuss your rights under the bankruptcy laws, please feel free to call me at (570) 823-9400 or send an e-mail to me at