Most employers know they can get slapped with retaliation claims for firing workers who have recently complained about harassment or other workplace wrongdoing. But a new case from the federal appeals court that covers California calls attention to a little-discussed retaliation law that employers should be aware of.
Worker Owes Employer Money
Norman Majewski was hospitalized at St. Rose Dominican Hospital and incurred substantial medical expenses that he couldn’t pay. He later went to work for the hospital but wasn’t able to earn enough over three years to pay back his hospital debt.
After negotiations to resolve the debt failed, Majewski informed the hospital that he intended to file for bankruptcy. But the hospital turned around and terminated Majewski before he filed his bankruptcy petition.
400+ pages of state-specific, easy-read reference materials at your fingertips—fully updated! Check out the Guide to Employment Law for California Employers and get up to speed on everything you need to know.
Wrongful Termination Lawsuit Filed
Majewski sued under a provision of the federal bankruptcy law that prohibits an employer from discriminating against or terminating an employee solely because the person “is or has been” a debtor under the Bankruptcy Act. The hospital argued that the law didn’t apply to Majewski because he had not yet filed for bankruptcy protection when he was terminated.
No Petition, No Retaliation
The Ninth Circuit Court of Appeals sided with the employer. The court noted that the bankruptcy law’s retaliation provision was designed to insulate debtors from unfair employment practices directly tied to their attempts to get a fresh start after bankruptcy. However, said the court, the retaliation protection only applies to employees who have actually filed for bankruptcy protection.
Broad Range of Retaliation Protections
With bankruptcy petitions on the rise because of the hard economic times, this case serves as an important reminder that it is illegal to discriminate against or terminate workers because they have filed for bankruptcy.
You also need to keep in mind that there are numerous other anti-retaliation provisions buried in state and federal laws. These range from the more well-known protections for employees who complain about discrimination, harassment or wage-and-hour violations, to lesser-known provisions such as protections for employees who serve as election officers on election day or whose wages have been threatened with garnishment. Note that under most anti-retaliation laws, employees are protected once they complain to management about the misconduct—whereas the bankruptcy law requires a formal bankruptcy filing to trigger the protections.