(Or, I Always Thought a Garnishment is Something You Eat)
Next to being sued directly, one of the most frustrating intrusions on a business is the day the Sheriff shows up and serves you with a wage or property attachment (also called a garnishment) against one of your employees. After the initial anger, panic, and frustration pass, you must take the proper steps to deal with the attachment.
Most small businesses have never had to deal with an attachment and many have no idea what a wage attachment is. In each case, an attachment is merely a court order that you take certain steps with regard to one of your employees. Unfortunately, those steps can be time consuming, aggravating and costly.
The right to attach or garnish employees’ wages usually arises only after they have been sued, they have lost their case, and, a judgment has been entered against them. If they don’t pay the judgment, the winning party (called the “Judgment Creditor”) has the right to ask the Court to issue a “Writ of Garnishment on Wages” that is to be served on the employer of the Defendant (called the “Judgment Debtor”). When you are served with one of these writs as an employer, you are known as a “Garnishee.” It’s an honor you can do without because it is then that your obligations begin.
Writs of Garnishment on Wages can arise from either the District Court (cases up to $25,000.00 or $30,000.00 effective October 1, 2007) or the Circuit Court (usually cases over $25,000.00 or $30,000.00 effective October 1, 2007) In addition, there is another form of wage garnishment arising out of a marital support obligation called an “Earnings Withholding Order” that originates with the Domestic Relations Master.
You will receive instructions with any such writ that is served upon you for an employee. You should carefully read the Order and follow the instructions. Your obligation to withhold funds begins with the next pay period after receipt of the Order. The instructions tell you what exemptions exist. In general, an employee is entitled to an exemption of 75% of “disposable wages” (meaning the amount remaining after deduction from earnings of any amounts required by law to be withheld) and medical insurance payments deducted from the employee’s wages.
You have an obligation to file an answer with the court within 30 days of receipt of the Writ of Garnishment indicating whether the employee is still employed and what his or her rates of pay are (and, if any other garnishments are still outstanding). The Order further requires you to remit the amount withheld to the Plaintiff or his attorney within 15 days after the close of the last pay period in each month. If you don’t file a timely answer, the Court may order you to show cause why you should not be held in contempt and require you to pay attorney fees. In addition, if you fail to properly withhold wages, you may have to pay the proper amounts yourself even if the employee has left your employ in the interim. Therefore, you should never ignore one of these Orders. If you have questions you should contact your attorney or the clerk of the court. In a pinch, you may even wish to call the office of the attorney who obtained the garnishment for more information. Your failure to act properly will be at your peril.
In short, the courts have placed a heavy burden on employers to assist in the enforcement of debt collection. It is another cost of doing business that you must be prepared to deal with. You should keep careful records and establish a simple procedure for dealing with attachments. In this economy, the number of attachments are increasing regularly and employers who never dealt with these problems will be dealing with them on a regular basis.