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 garnishment even when the person is not employed or appears not to earn enough money.
The consequences for ignoring a garnishment can be extreme. In the majority of states, an offending garnishee (i.e., an employer) is liable for up to the full amount of the debtor’s (whether this person turns out to be an employee or not) outstanding debt. In the few states that require a disclosure at the end of the garnishment (rather than at the beginning) the non-answering garnishee is usually liable for the amount that would have been withheld from the employees’ wages. Two states, Georgia and Wisconsin, provide employers with an affirmative defense to this nearly unfettered liability.
In Georgia, a default will automatically be entered against an employer that fails to answer a garnishment order. The employer then has 15 days to open the default by filing a belated answer and payment of costs. If the employer does not take these actions, the court may enter a judgment by default against the employer for the full amount of the debtor’s outstanding debt—regardless of whether the debtor is still, or ever was, an employee. The employer is allowed an additional 60 days after notice of the judgment to file a motion to modify the judgment. When the employer pays the court costs the judgment will be reduced to the greater of $50 or $50 plus what would have been withheld under the garnishment order. Thus, if the employer acts quickly, it can reduce or nearly eliminate the award against it for failing to answer. The only other state that gives employers an affirmative defense for failing to answer a garnishment order—Wisconsin—has a similar garnishee-friendly process.
Cases keep piling up in which courts are holding employers liable for large sums of money for simply missing answer deadlines or for filing defective answers. Courts are even holding employers liable in Georgia when they miss deadlines to automatically obtain modifications of judgments as discussed above. For instance, in Oxmoor Portfolio, LLC v. Flooring & Tile Superstore of Conyers, Inc., the Georgia Court of Appeals ruled that the employer’s answer was defective and that the employer/garnishee did not timely seek to modify the judgment. Instead, the employer unsuccessfully sought to have the default judgment set aside utilizing the court rules to set aside a default judgment in a civil action. Ultimately, the employer/garnishee was liable for the entire debt for a minor administrative error: filing a timely but defective answer.
Another example in which the employer was liable for the entire debt comes from the Court of Civil Appeals of Oklahoma, which decided Discover Property and Casualty Ins. Co. v. Collins. The employer had been obligated to answer a second-filed garnishment immediately and to provide subsequent answers after each pay period. Since the employer’s original answer was defective (but timely) and since it did not file subsequent answers and ultimately failed to implement the second garnishment when the first expired, the court ordered the employer to pay the full amount of the outstanding debt for a total of $10,630.15.
These are only two examples (most garnishment cases never reach courts of appeal) from the past few months demonstrating the importance of properly and timely filing answers. As an employer, it is critical to know wage garnishment law or else become liable for the full amount of the employee’s debt.
In my next blog post in this series, I will discuss a few of the critical differences in the legal requirements between the states about which garnishees need to be aware so that they can properly administer creditor wage garnishments.
Martin C. Brook is a shareholder in the Detroit Metro office of Ogletree Deakins. He is also the author of O-D Comply: Garnishments, a subscription-based product focusing on the most popular, varied, and difficult wage attachments: (1) creditor wage garnishments; (2) federal student loan wage garnishments; (3) federal tax levies; and (4) voluntary wage assignments. A subscription to O-D Comply: Garnishments includes a concise table identifying the fees that employers are entitled to collect for administering wage attachments (including support orders, creditor garnishments, state and federal tax levies, and federal student loans).