A federal appeals court has ruled that private companies can refuse to hire prospective employees if those applicants have filed for bankruptcy, even though the government may not.
The ruling came in a suit filed by Shani Burnett, who was offered a job by Stewart Title in 2008 only to have the offer rescinded when the company learned during a background check that she had filed for bankruptcy less than a year earlier.
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.
Judge Carolyn King, who wrote the court's unanimous opinion, 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 the bankruptcy code 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.
Burnetts lawyers 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.
King's opinion said Congress deliberately decided to omit "deny employment to" from the bankruptcy code provision for private employers, while including the prohibition for government employers.
"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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