Employers often dread seeing certain envelopes in the mail. Wage garnishment summons and answer affidavits have become a common employment hassle. Although legal services are not required in most cases, managers who have dealt with these issues in the past know responding is obligatory and time-consuming.
Collection firms are taking a more aggressive approach in recent years, complete with discovery requests and related paperwork. The process often seeks to hold the employer liable for the entire judgment amount because the employer failed to respond in a timely manner to the garnishment summons or inadvertently missed a technicality on a minor aspect of the garnishment calculations. The employer can be held responsible for the entire judgment, not just the garnishment amount, plus attorneys’ fees, making the combined costs worth preventing.
Although most employers are familiar with garnishments or rely on their resolution through a third-party payroll administrator, being aware of the basics can save the company in both the long and short term.
First, employers have the earlier of seven days after the end of the employee’s current pay period or 30 days after the garnishment summons is received to file a response. Most employers must respond within seven days at the end of the employee’s current pay period. This time period allows employers to make the garnishment calculations on the form sent by the collection firm, notify the employee of the garnishment and their right to make exemption claim(s), and file the garnishment answer affidavit with the court.
Second, a continuing garnishment is required for every pay period because the employee’s wages and withholdings may change or the employee may file for an exemption.
Third, an employee may have multiple garnishments. Child support garnishments will take priority, followed by continuing wage garnishments for unpaid debt. In the answer affidavit, employers should notify the collection firm of the current garnishment. However, it is key to start withholding under the second received garnishment once the current garnishment expires at the 180-day mark.
Fourth, employers cannot take any adverse employment action against an employee based on garnishments. Garnishment cannot be cause for demotion or dismissal.
Fifth, a bankruptcy stay is likely. If the employee whose wages are being garnished files for personal bankruptcy, the bankruptcy court may file a stay to hold off creditors until the bankruptcy plan can be established. If you receive a stay, cease all garnishments immediately and inform the creditors’ attorneys via the garnishment answer.
Finally, don’t panic if you complete a garnishment answer affidavit incorrectly or miss a letter. In that event, your attorney will be best suited to handle the matter.
* This article first appeared in The Journal Record on January 20, 2023, and is reproduced with permission from the publisher.