Can Massachusetts Employers Fire You for Filing for Bankruptcy?

Clients and potential clients in Massachusetts sometimes ask us if filing for a Chapter 7 Personal Bankruptcy will have any adverse effect on their employment status. The answer is fairly clear: no.
In 1978, Congress passed a law which prevented various types of discrimination against folks who filed for bankruptcy protection. With respect to denying employment, that law states that an employer cannot “deny employment to, terminate the employment of, or discriminate with respect to employment against” anyone simply because he or she has filed for personal bankruptcy.


In 1984, Congress passed another law, which provides even more protection. The federal bankruptcy law regarding this, Section 525(b) states as follows:
 
(a) Except as provided in the Perishable Agricultural Commodities Act, 1930, the Packers and Stockyards Act, 1921, and section 1 of the Act entitled “An Act making appropriations for the Department of Agriculture for the fiscal year ending June 30, 1944, and for other purposes,” approved July 12, 1943, a governmental unit may not deny, revoke, suspend, or refuse to renew a license, permit, charter, franchise, or other similar grant to, condition such a grant to, discriminate with respect to such a grant against, deny employment to, terminate the employment of, or discriminate with respect to employment against, a person that is or has been a debtor under this title or a bankrupt or a debtor under the Bankruptcy Act, or another person with whom such bankrupt or debtor has been associated, solely because such bankrupt or debtor is or has been a debtor under this title or a bankrupt or debtor under the Bankruptcy Act, has been insolvent before the commencement of the case under this title, or during the case but before the debtor is granted or denied a discharge, or has not paid a debt that is dischargeable in the case under this title or that was discharged under the Bankruptcy Act
b) 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, a debtor or bankrupt under the Bankruptcy Act, or an individual associated with such debtor or bankrupt, solely because such debtor or bankrupt–
 
(1) is or has been a debtor under this title or a debtor or bankrupt under the Bankruptcy Act;
 
(2) has been insolvent before the commencement of a case under this title or during the case but before the grant or denial of a discharge; or
 
(3) has not paid a debt that is dischargeable in a case under this title or that was discharged under the Bankruptcy Act.
The question regarding whether or not a potential employer discriminate is not as clear in Massachusetts. See the the case called Myers v. TooJay’s Management Corporation, United States District Court, M.D. Florida, October. 21, 2009.