People thinking about bankruptcy in Maryland often worry about their job before they worry about their creditors. Can an employer find out? Can they act on it? Two different bodies of law answer that, one federal provision aimed squarely at bankruptcy and a separate set of rules about credit reports, and they protect you to different degrees.
Federal law protects your existing job
The Bankruptcy Code addresses this head on. Under 11 U.S.C. § 525, neither a government employer nor a private employer may terminate you, or discriminate against you in your employment, solely because you have filed for bankruptcy or because of a debt discharged in it. If you are employed and you file, that protection is real.
There is a limit worth being straight about. Section 525(b) is written in terms of existing employees, and courts have not treated it as clearly barring a private employer from declining to hire an applicant because of a past bankruptcy. Government employers are more clearly restrained under § 525(a). So the protection is strongest where you already hold the job and weakest at the hiring stage with a private employer.
What an employer may see
A bankruptcy filing is a public record, and it appears on a consumer credit report. Where an employer wants to pull that report on an applicant or a current employee, the federal Fair Credit Reporting Act (15 U.S.C. § 1681 et seq.) sets the rules. The employer has to tell you before obtaining the report and get your permission. If it then intends to take adverse action based on what the report says, whether that means not hiring you or acting against you in your job, it must give you notice first, with a copy of the report and a summary of your rights.
Maryland adds its own protection
Maryland goes further than federal law. The Job Applicant Fairness Act, passed in 2011 and codified at Md. Code, Labor & Employment § 3-711, generally bars employers from using an applicant’s or employee’s credit report or credit history to decide whether to hire, whether to terminate, or how much to pay.
Where the two overlap, an employer has to satisfy both. Federal notice-and-consent rules apply to pulling the report at all, and Maryland’s Act restricts what may then be done with it. State law does not displace the FCRA. It adds to it.
Employers the Maryland Act does not cover
Section 3-711 lists exceptions. The Act generally does not apply to financial institutions that accept deposits insured by the FDIC, to credit unions insured privately rather than federally, to employers required by state or federal law to consider an applicant’s or employee’s credit history, or to investment advisers registered with the U.S. Securities and Exchange Commission.
Even an exempt employer still has to give you notice if it uses your credit report for an employment purpose.
Roles where credit history may be considered
A covered employer can still look at credit history for particular positions, broadly those carrying financial or confidential responsibility. That includes access to personal or financial information of customers or the employer, access to confidential business methods, processes or trade secrets the employer requires be kept confidential, access to an expense account or a corporate credit card, a managerial role directing a business, division or unit, and authority to transfer money, issue payments, collect debts or manage revenue accounts.
What this means in practice
Worried about your current job? Section 525 is on your side. If you are job-hunting in Maryland, the Job Applicant Fairness Act limits what most employers may do with your credit history, though the protection narrows for the specific roles and employers listed above. Where your situation falls near one of those lines, it is worth a conversation before you file rather than after.
Jan Berlage offers a free initial consultation. Call (410) 752-9300 or use the contact form on this page.