Tag Archives: garnish

West Virginia changes its automatic exemption for garnishments

In a recent change to its wage garnishment laws, West Virginia has changed how one determines the amount of the automatic exemption (the amount below which no creditor garnishment can be applied) for garnishments.

Effective June 9, 2016, earnings below 50 times the federal minimum wage are not subject to garnishment. Previously, West Virginia followed the federal limit—30 times the federal minimum wage.

It is recommended that employers with employees in West Virginia whose wages are being garnished review their calculations of the amount being garnished and verify that the garnishment is being calculated in accordance with the new laws.

Please be advised that over-withholding due to a garnishment could render the deduction as unauthorized and potentially expose the employer to minimum wage and/or overtime violations plus liability for liquidated damages and statutory penalties under state payment of wage laws for failing to pay the full wages owed.

 

South Dakota changes its automatic exemption for garnishments

In a recent change to its wage garnishment laws, South Dakota has changed how one determines the amount of the automatic exemption (the amount below which no creditor garnishment can be applied) for garnishments.

Under the new law, the maximum deduction is now

  • 20 percent of an employee’s wages or
  • the amount of weekly disposable earnings beyond the greater of:
    • 40 times the federal minimum wage as of July 24, 2009 ($7.25) or
    • 40 times the state minimum wage (currently $8.55).

The new law also changed the definition of “earnings” to exclude payments made as a part of “a pension or retirement program.” This means that any payments made from a pension plan are no longer subject to a South Dakota garnishment.

It is recommended that employers with employee in South Dakota whose wages are being garnished review their calculations of the amount being garnished and verify that the garnishment is being calculated in accordance with the new laws.

Please be advised that over-withholding due to a garnishment could render the deduction as unauthorized and potentially expose the employer to minimum wage and/or overtime violations plus liability for liquidated damages and statutory penalties under state payment of wage laws for failing to pay the full wages owed.

 

Change in California garnishment rate now effective

On July 1, 2016, California Senate Bill 501 went into effect. This law changed how a wage garnishment amount is calculated.

Under the new law, the garnishment deduction maximum is now linked to the local minimum wage rates that are in effect when wages subject to garnishment are earned. This means that when calculating a wage garnishment, the state or local minimum wage rate applicable to the employee, whichever is higher, must be used.

In addition, as of July 1, 2016, the maximum amount of disposable earnings subject to garnishment shall not exceed the lesser of:

  • 25 percent of the employee’s disposable earnings for that week; or
  • 50 percent of the amount in excess of 40 times the state minimum wage or local minimum wage in effect for the employee at the time the wage is payable, whichever minimum wage rate is higher.

This change will reduce the amount of wages garnished from low to moderate earners, but will not impact higher earners, as the 25 percent deduction level will continue to be used.

It is recommended that employers with employees in California whose wages are being garnished review their calculations of the amount being garnished and verify that the garnishment is being calculated in accordance with the new laws.

Please be advised that over-withholding due to a garnishment could render the deduction as unauthorized and potentially expose the employer to minimum wage and/or overtime violations plus liability for liquidated damages and statutory penalties under state payment of wage laws for failing to pay the full wages owed.

 

Tennessee’s garnishment laws extended to independent contractors

Earlier this spring, Tennessee governor Bill Haslam signed an amendment to the Tennessee wage garnishment law, which went into effect on September 1, 2016.

Under this amended law, the definitions of “employer” and “employee” have been expanded to include:

  • For employee — persons contracted by an employer
  • For employer – persons who the retains, or contracts with.

As a result of this changes, payments made to an independent contractor are now subject to garnishment. This means that a Tennessee garnishment directed to an employer now specifically includes contract payments made to independent contractors.

It is recommended that Tennessee employers who use independent contractors review the Tennessee wage garnishment laws to verify their garnishment handling procedures are compliant with these changes.

 

Employer Friendly Changes made to the Michigan Wage Garnishment Laws

In late 2015, Michigan Governor Rick Snyder signed Public Act 14 into law.  This Act made employer-friendly amendments to Michigan’s wage garnishment laws while streamlining the wage garnishment process. The amendments also decreased the default judgment risks arising when a garnishment is mishandled.

Some of the changes include:

  • Requiring that a $35 fee (instead of a $6 fee) be paid to the garnishee (ie the employer);
  • Changing the duration of the garnishment so that garnishment continues until the balance of a judgment identified in the verified statement supporting a garnishment is satisfied in full (instead of the garnishment ending after six months).
  • Requiring that a garnishment be properly served or it is invalid.
    • Previously the law allowed a garnishment to be served via store or plant-level delivery.
  • Requiring the plaintiff (the one seeking to enforce the garnishment) to provide the garnishee and the employee whose wages are being garnished (the judgement debtor) with a balance statement every 6 months
  • Requiring the plaintiff provide the employer/garnishee and employee judgment debtor with a release of garnishment within 21 days of full payment of the judgment (including all costs and interest).
  • Requires a plaintiff to engage in a new multistep notification process prior to garnishing an employee’s wages
  • Creates a new complete defense to employer/garnishee liability, which is intended to protect employers when the garnishment and/or notice of failure are not properly served or the employer owes the debtor no funds.
  • Limits liability of garnishees to 56 days of proper withholding when the garnishee files a motion within 21 days after a default judgment.
  • Allows employers to deduct from the employee’s wages without the necessity of obtaining voluntary written consent any amounts that the employer had to pay due to mishandling the garnishment

The new laws affect garnishments that were issued after September 30, 2015.  It is recommended that all Michigan employers review their wage garnishment obligations under these new laws.

 

Georgia clarifies its wage garnishment laws

After being held unconstitutional by the U.S. District Court for the Northern District of Georgia in September of 2015, the Georgia garnishment statute has been in a state of confusion – especially for Georgia employers. This confusion was only exacerbated when, a month later, the same court amended its previous order and further held that continuing garnishments for wages were not impacted by this ruling.

Due to both the confusion and the fact that all other forms of garnishment (e.g., to financial institutions) were subject to the stay, an amendment to the Georgia wage garnishment law was introduced earlier this spring (Senate Bill 255). This bill was later signed into law by Georgia Governor Nathan Deal on April 12, 2016 and went into effect on May 12, 2016. Because this new law impacts the garnishment of employee wages, there are some changes of note:

  • Increases in the number of types of earnings that may be subject to garnishment. Several specific types of earnings were added to the list of what is subject to garnishment. Now included on the list are severance payments, tips, and overtime compensation. While this change has little impact on employers because both severance payments and overtime compensation were previously presumed to be included and tips are presumed excluded (according to the U.S. Department of Labor’s Wage and Hour Division view that tips (not including any amount paid to employees as a tip credit) are not earnings).

    However another addition – deferred compensation in an unfunded employer plan – was likely not considered garnishable wages by most employers. While the statute fails to address how this change will be implemented, employers should consider these funds subject to garnishment in Georgia and analyze how to include those funds in a garnishment.

  • Uniformity in the garnishment request process. The new law creates a uniform statewide process for requesting a garnishment of wages. In addition, new uniform forms were created . these processes and forms are to be used in all Georgia courts.
  • Clearly defines “invalid forms”. Under the new law, a garnishment is not valid if the surname of a defendant is misspelled or a plaintiff uses the wrong form (e.g., a form for garnishment of a financial institution).

 

  • Extended deadline for employers to challenge a default judgment for mishandling. Under the old law, an employer had 60 days to challenge the judgment after actual notice. Now, the employer has 90 days to challenge the judgment after service.

It is recommended that all Georgia employers review their wage garnishment obligations under these new laws.