On September 15, 2010, the House Subcommittee on Commercial and Administrative Law voted 8-4 to report H.R. 4677 to the full House Judiciary Committee. Called the “Protecting Employees and Retirees in Business Bankruptcies Act of 2010,” H.R. 4677 contains several substantial changes to federal law aimed at preserving workers’ wages and benefits during a Chapter 11 bankruptcy proceeding. The subcommittee members voted along party lines, indicating that the bill will have a difficult fight in the full committee – its fate may ultimately depend on the result of the recent election.

Most employers know that it is unlawful to terminate the employment of or to discriminate against an individual who has previously filed bankruptcy because of his or her status as a debtor in a bankruptcy proceeding. A recent Federal Court of Appeals decision, however, highlights the distinction between denying employment to an individual based on prior bankruptcy filing and terminating the individual’s employment because of it.