Potential Protections for Employees, Including Those Who Are Bankruptcy Bound Skip to main content

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Potential Protections for Employees, Including Those Who Are Bankruptcy Bound


In a move that, as The New York Times described it, “will affect most American corporations,” the Labor Department has announced its latest mandates for company compliance with plans to end wage violations, increase workplace safety and adhere to equal employment laws.

As The New York Times’ Steve Greenhouse reported, “The effort, aimed in part at reducing the incidence of employers not paying overtime and improperly classifying workers as independent contractors, will require them to document many of their decisions and share that information with their workers and the government. In announcing the department’s intentions on Thursday, Deputy Labor Secretary Seth Harris said his department wanted to foster a culture of compliance among employers to replace what he described as a ‘catch me if you can’ system in which too many companies violated employment laws.”

Within these broader strategies for corporate compliance is the potential for added protections for employees considering the benefits of bankruptcy.

The broader strokes of this literal “work-in-progress” are two-fold:

(1) Workplace Safety. New Labor Department rules would require employers to stop “planning” and start “doing,” by developing formal policies for eliminating safety and security hazards in the workplace and directly engaging in these plans in order to evaluate their effectiveness.

(2) Worker Classification. In this effort, the Labor Department is targeting companies who avoid paying workers their due overtime pay and improperly classifying employees to avoid providing proper benefits. In doing so, these changes will require these same companies to document these classifications, providing written explanations of the reasons behind that classification and sharing those explanations with workers and government agencies.

Like clockwork, business interest groups are fighting these Labor Department plans, arguing the new rules mean new burdens on already beleaguered employers without “necessarily improving compliance with labor laws.”  And with these proposed changes still in the development stages—giving big business another opportunity to attack the finalized plans—experts say it’s likely to be a year before the changes can be implemented.

Despite these challenges, as Greenhouse reports, “Department officials say they hope the plan will greatly reduce problems in industries with widespread wage violations, like restaurants and discount retailing, and those with widespread safety violations, like coal mining and construction.”

Labor Department Benefits and Bankruptcy. In addition to activating more transparent corporate compliance of internal safety practices and classification policies, this new plan may also extend to employment law protections, reinvigorating enforcement of workplace anti-discrimination policies aimed at protecting employees who have bad credit or are bankruptcy bound. Currently, federal bankruptcy law contains some provisions which prevent unfair treatment of employees who have filed for bankruptcy.

While some employers can run a credit check on prospective employees, under federal law, these same companies must actually get written permission from applicants in order to run their credit check. In the meantime, consumer advocacy groups are showing their support for legislative bans on these types of credit checks, pointing out that credit reports can also contain inaccurate information.

While credit checks are sometimes used in the hiring process, your decision to file bankruptcy should never affect your employment status with an employer.

Until these worker-friendly benefits are in place, consulting with a qualified bankruptcy attorney when facing concerns about your bankruptcy impacting your employment, could be your next, best step.

A qualified bankruptcy attorney can assist jobless and employed citizens with even the worst credit histories to conquer their fears of losing it all.  Specifically, the bankruptcy attorneys at the Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their offer. Just call toll free to +1-919-646-2654, or during the off hours, you can make your own appointment right online at www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button.

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