The 1984 Amendments to the United States Bankruptcy Code provide that a private employer may not terminate the employment of or discriminate with respect to employment against any person who has been a debtor under either the Bankruptcy Code of the 1898 Bankruptcy Act, including any person who has been associated with such a debtor or bankrupt, solely on the basis that the person has been a bankrupt or has been insolvent before or during a bankruptcy case or has not paid a debt discharged in bankruptcy [See, 11 U.S.C. § 525(b)].
Note that employment discrimination within the meaning of § 525(b) occurs only if it is solely because of a person’s bankruptcy. The debtor has the burden of establish that the employer dismissed him or her solely because a bankruptcy filing. The employer may dismiss a debtor for any cause that is unrelated to the debtor’s bankruptcy.
A person aggrieved of this section of law is allowed a private cause of action pursuant to § 525 of the Bankruptcy Code. The courts are divided however, as to whether an alleged violation of this section of federal law gives rise to a § 1983 Civil Rights action.