Bankruptcy

Fired Because of Bankruptcy Filing, Court Denies Relief

By Craig Andresen, Minnesota Bankruptcy Attorney

A Texas bankruptcy court ruled on December 30, 2009, that an employee who was fired after filing bankruptcy was not protected the bankruptcy code’s non-discrimination provision, 11 U.S.C. section 525(b).  This section states as follows:

No private employer may terminate the employment of, or discriminate with respect to employment against, an individual who is or has been a debtor under this title … solely because such debtor … is or has been a debtor under this title….  11 U.S.C. sec. 525(b).

In Banner v.  ABF Freight System, Inc., 2009 WL 5216883 (Bky.N.D.Tex. Dec. 30, 2009), the debtor was hired as a sales representative for ABF in October 2006.  All ABF employees were required to qualify for and maintain an American Express corporate card, to pay for customer entertainment and travel.  In December 2007, the debtor filed bankruptcy and her American Express card was cancelled.  One month later, a charge on the debtor’s American Express card was declined after lunch with a client.  Her employer then fired her, and she sued, claiming that section 525(b) prevented this firing.

The employer responded by pointing out that after it discovered that the debtor’s American Express card had been cancelled, it held a management meeting to determine whether an exception to its American Express card policy should be made in the debtor’s situation, or whether ABF should guarantee the card itself, as it sometimes had in the past for employees who had filed for bankruptcy.  The debtor was informed at the meeting that she was being fired due to the bankruptcy having resulted in her American Express card being suspended.

ABF also claimed that the debtor’s job performance was poor, and that formed an alternate basis for firing her.  It introduced into evidence several monthly sales audit reports which it claimed showed problems with the debtor’s sales achievements.  The debtor countered by claiming that she had nevertheless been fired as a direct result of her bankruptcy filing.

The bankruptcy court disagreed that the debtor had been fired solely because of her bankruptcy filing, as section 525(b) prohibits.  It was significant that ABF had considered making an exception to its American Express card policy, but that it had declined to do so in light of the debtor’s poor job performance.  The court held that the debtor had failed to meet her burden of proving that she had been fired solely because of her bankruptcy filing, and accordingly her claims were dismissed.

Full post as published by Bankruptcy Law Network on March 08, 2010 (boomark / email).