Tips for Garnishee Employers, Part Two: A Light at the End of the Tunnel? Relief From Your Woes May Be in Sight

by Ogletree, Deakins, Nash, Smoak & Stewart, P.C.
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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 garnishments are challenging and costly for employers because they must strictly comply with countless variations in the requirements imposed by states laws. Debt collectors may benefit from this complexity as multifarious rules often result in noncompliance with garnishment orders—but employers most certainly do not. This is because any administrative error exposes the employer to the risk of a default judgment against it for the full amount of the debtor’s unpaid debt—even if the debtor is not an employee of the employer.

The variations in state laws impact each step of the garnishment process, from the requirement of an employer’s disclosure, the timing of the disclosure, the form of the disclosure, and the rules affecting the recipient of the disclosure, to the duration of the garnishment, the definition of earnings and disposable earnings, and the necessity of a disclosure at the end of the garnishment. Further, each state’s requirement must be followed to the letter. As a result of these onerous variations and the requirements to strictly comply with the law, employers are prevented from implementing common cost and risk control measures, such as adopting the most stringent requirements as a standard process across all states.

One possible solution to the costly and burdensome problem created by the variations on state garnishment requirements may come from the Uniform Law Commission (ULC). This organization’s purpose is to identify and eliminate legal issues that prevent or hinder interstate commerce by drafting uniform or model laws for state legislatures to consider adopting. The Uniform Commercial Code and the Uniform Trade Secrets Act are two very successful examples of the ULC’s efforts.

The ULC reviewed a request from the American Payroll Association (APA) to draft a uniform wage garnishment law and chose to appoint a committee to study the variations to be found in state creditor garnishment laws so that it could decide whether it could offer an effective solution to the problem. After 18 months of study, the committee recommended the appointment of a drafting committee. The full ULC accepted this recommendation and in July of 2013 appointed a committee to draft a uniform wage garnishment law. The first meeting of this committee will be in March of 2014 and the expected project completion date is July 2016.

Completion of a uniform wage garnishment law in July 2016 is not the end; it’s really just the beginning of the hard work. That is when interested parties must contact their state legislatures and urge the adoption of a uniform process.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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