Often, reported cases present two important lessons. Consider the facts of this case:
In order to obtain a new start, a man filed personal bankruptcy in February 2008. As part of the new start, he moved to a different state and obtained a new job.
Within months, he applied for a job with a different employer. The new job would have been a big step upward. The interview went well and the prospective employer paid for the man to attend a two–day, on–the–job evaluation program.
The evaluation also went well. The man was told that the new employer would conduct a credit history check, and he consented.
After the evaluation, the man was offered a job and was scheduled to begin work in three weeks. He was not told that his employment was conditioned on a favorable credit history report.
In reliance on the offer of the new job, the man quit his old one. Immediately thereafter, based on the results of the credit report, the new employer notified him that he would not be hired due to the bankruptcy he had filed.
There is a federal statute that addresses this issue. The statute distinguishes between a "governmental" employer and a private sector employer. A governmental employer may not deny employment to, terminate the employment of or discriminate against any person who has filed bankruptcy. Note that his protection relates to "hiring" a person. The statute treats private sector employers differently. It prohibits the termination of an employee or discrimination against an employee, who files or has filed bankruptcy. Note, that as to private employers, it doesn't protect applicants for employment.
Since the employer was in private sector, the employer did not violate the statute when it refused to hire the man due to his bankruptcy filing. The different treatment of governmental versus private sector employers is lesson No. 1.
Lesson No. 2 relates to how close the employer came to losing the case. The man argued (unsuccessfully) that he had been hired before the credit report results came back. He received two days of paid training (or was it "evaluation"?). He was told he had a job, without mention that it was contingent on the credit check results. He quit his job in reliance on this assumption.
The court held that even with these facts, the man had not been hired. Employers must be careful with their pre–employment activities. The more they appear to be more like post–employment activities (like paid on–site training), the more likely it will be that a court will hold that the applicant had been hired, and was an employee.
By James Jorgensen
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