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Federal court outside Ohio issues background check ruling

A second federal appellate court has ruled that private companies can consider a person's bankruptcy history in making a hiring decision. The ruling was handed down by the Fifth Circuit Court of Appeals in the South. The Fifth Circuit does not include Ohio, but in the absence of contrary authority, the decision could be persuasive to a court in Ohio.

The case arose in 2008. A woman applied for a job as a paralegal at a real estate and title company. The company offered her a job contingent upon a background check. The woman had filed for chapter 13 bankruptcy the previous year. Based upon her background check, the company withdrew its offer of employment.

The federal appeals court ruled that a 1984 law that protects against job discrimination based upon a past bankruptcy applies to the government. The three judge panel says the hiring provision does not apply to private employers. In the opinion, the court says a challenge to the hiring decision in the case "is a policy argument best made to Congress."

The decision is consistent with another federal appellate ruling issued last year in the Third Circuit, which is located to the East of Ohio. Ohio rests in the Sixth Circuit.

The issue has risen more frequently in recent years as private employers have increased the use of pre-employment background checks. Bankruptcy and employment advocates believe that congressional intent may be frustrated by the recent appellate rulings. The matter is pending in a third appellate court and the issue may, at some point, reach the Supreme Court for a definitive nationwide decision.

Source: Westlaw News & Insight, "Appeals court rules against job seekers who file for bankruptcy," 10 Mar 2011

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