Most employers receive a garnishment from time to time, and some employers receive a lot of them. It is the employer’s legal obligation to administer garnishments exactly, and liability arises for the employer for over-deducting or for the judgment creditor in the case of under-deducting.
Recently, Illinois revised its wage assignment law. This development is important for multistate employers because Illinois is the only state with a statute that clearly and unequivocally provides that employers must honor contracts employees make with third parties to assign wages.
A frequent bone of contention for employees/debtors has to do with the implementation of out-of-state garnishments. The employee often threatens to sue the employer claiming that an out-of-state garnishment is not valid and/or that the exemption rules of the state where the employee works prohibit creditor wage garnishments. These arguments most often arise from employees working in Texas, North Carolina, South Carolina, and Pennsylvania. However, no matter where an employee works or resides, these arguments are flat wrong.
A rare and interesting thing in the world of federal garnishment law has just occurred: the U.S. Department of Labor’s Wage and Hour Division (WHD) updated its published position concerning the meaning of “earnings” pursuant to the Consumer Credit Protection Act (CCPA). This is important because the Department of Labor has issued very little regulation interpreting the CCPA and none define what the CCPA means by “earnings.” And, while there are several opinion letters from the years directly after the CCPA was adopted, only one such letter has been issued since 1972. Keep in mind that the federal decision concerning what is or is not CCPA-earnings (such as disability payments, tips and lump sum bonus payments, which are addressed herein) is critical because if the funds are not CCPA-protected earnings then states decide whether to garnish those funds and how much, if any, of those funds to protect from garnishment.
On October 20, 2016, the Department of Justice (DOJ) Antitrust Division and Federal Trade Commission issued a guidance aimed at alerting human resources professionals on potential violations of the antitrust laws. According to a DOJ statement, the guidance is intended to “help educate and inform” HR professionals and other professionals who are involved in making hiring and compensation decisions “about how the antitrust laws apply to the employment arena.” However, when reading the guidance you would not be wrong to feel as though the document is more threatening than informative.
A business dispute in Michigan may provide insight into the consideration required to support a noncompete contract restricting future employment.
What employer would not like to reduce its legal risks and administrative costs? The Uniform Law Commission (ULC) presented employers with just that opportunity when on July 13, 2016 it finished three years of studying and drafting work and gave approval to the Uniform Wage Garnishment Act (UWGA). The ULC is a 125-year-old organization comprised of commissioners appointed by the 50 states (plus Puerto Rico and the Virgin Islands) that drafts laws for the states to consider and adopt where uniformity would improve commerce between states. After the ULC approves a uniform law, such as the UWGA, the commissioners of each state will present the statute for consideration to their state legislature.
The requirements and processes applicable to employers handling garnishments are primarily governed by state law—meaning that multi-state employers need to be aware of the federal Consumer Credit Protection Act (CCPA) in addition to the garnishment requirements in all states.
Complicating matters further, is the fact that state legislatures frequently tweak garnishment requirements and processes.
The requirements and processes applicable to employers handling garnishments are primarily governed by state laws. Therefore, in addition to the federal Consumer Credit Protection Act (CCPA), multistate employers need to be aware of the garnishment requirements in all states. As if these issues are not enough, complicating it further for employer compliance initiatives is the fact that state legislatures frequently tweak garnishment requirements and processes. During the past several months, six states have made noteworthy changes to their garnishment laws and two states made major changes. This two part-series covers the changes to the garnishment laws in Michigan, Georgia, Tennessee, California, South Dakota, and West Virginia.
Today, Michigan Governor Rick Snyder signed into law two House bills that will dramatically reduce employers’ administrative burdens and financial risk while also increasing the funds paid to employers that must comply with garnishments. The amendments take effect on September 30, 2015.
Today, much-needed attention is being paid to wage garnishments. National Public Radio (NPR) released a story concerning the increasing use of wage garnishments to collect debts. The NPR piece relies on a report also released today by payroll company ADP. The report provides data, which had previously never been made publicly…..
An order for a wage garnishment is surprisingly complex to administer and very risky for employers. For instance, if an employer does not answer a garnishment within 14 days or do any other act required by the court, it is subject to a judgment against it for the full amount…..
In part one of this two-part series on garnishments, I discussed the consequences employers face if they mishandle garnishment orders. In part two, I address one of the hurdles that employers face when trying to comply with garnishment orders, namely, the variation in garnishment laws from state to state. Creditor wage…..
In my last blog post I mentioned five tips for administering creditor wage garnishments. This post will focus on the first tip: Employers should never ignore and always strictly follow a garnishment. It is a court order directing the employer to perform a certain act. Therefore, employers should always answer the…..
Many employers aren’t aware that a failure to properly administer a garnishment of an employee’s wages can result in employer liability for a significant amount of money. In most states, an employer that makes even the slightest mistake when administering a garnishment (such as being late on a required disclosure)…..
Administration of wage garnishments, once a quiet and little-known back office function, like it or not, has stepped into the not so glamorous limelight. This has been caused by the convergence of several factors.One factor is that the volume of wage garnishments is growing by leaps and bounds because creditors and entities that have purchased
Effective December 21, 2010, the Michigan Wages and Fringe Benefits Act (MWFBA) was amended permitting Michigan employers to require their Michigan-based employees be paid via direct deposit or via a payroll debit card. Previously, employers had to issue paper checks if the employee did not give his or her “full, free and written” consent to direct deposit. Likewise, unless payroll debit cards were in place prior to January 1, 2005, “full, free and written” consent also was required for use of payroll debit cards.