As Nevada continues to lead the country in per capita bankruptcy filings, many Las Vegans are concerned they might be fired or face other retaliation by their employers if they file bankruptcy.
Nevada, like most states, considers employees “at will” which means that employees can be fired for any reason or even no reason as long as it is not done in violation of certain public policy protections such as race or gender. However, bankruptcy code specifically states that employees may not be fired simply because they filed for bankruptcy. The Bankruptcy Code, at 11 U.S.C. sec. 525(b), states that “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.” Employees terminated unlawfully based on filing for bankruptcy may receive back pay including fringe benefits and reinstatement, and may also recover damages for emotional distress.
However, it is highly unlikely that employers or anyone else will ever know who files for bankruptcy unless the employee discloses that information. The only parties that will know are creditors and any co-debtors (co-signers). No one stands outside the court house to read off the names of those who filed for bankruptcy that day and the names of people who have filed for bankruptcy are not published in local newspapers or community newsletters.
In summary, employers will only know if an employee files for bankruptcy protection if that employee tells them. Furthermore, if an employer does somehow learn of the filing and attempts to retaliate against the employee because of the bankruptcy, the employee can turn to the protections provided by the bankruptcy code.
Randy M. Creighton, Esq.
