Creditors use employer garnishment errors to collect entire debt from employers
Employee wage garnishments appear to be informal and somewhat routine proceedings from the perspective of the employer. Employers are routinely sent writs of garnishment on printed forms, and employers can simply respond to writs of garnishment without using an attorney. Employers, however, face a huge risk relative to its employees’ garnishment proceedings because in the State of Michigan, employers can be held liable for the entire debt of the employee that is subject of the garnishment, including court costs and attorney’s fees, if the employer fails to comply with certain requirements. Some creditors are paying attention to the small details that the employer may overlook, because the creditor wants to be repaid and rather than wait around to be paid from the debtor, creditors are using employer garnishment errors to collect the entire debt from the employer. Employers are commonly not represented by counsel in this process and creditors are represented by counsel, providing the creditor a significant advantage.
Failure by employers to respond within 14 days could cause courts to take action against the employer
If an employer is named as the garnishee in a writ of garnishment, the employer must provide information as to the debtor-employee’s money that the employer controls on the Garnishee Disclosure Form, including a calculation of the amount that is available for garnishment from the employee’s paycheck. The properly completed form must be mailed to the court and the parties within 14 days after the employer receives the writ of garnishment. If the employer fails to disclose within the 14 days, the court can take action against the employer and can order the employer to pay the full amount owed on the judgment as stated in the writ of garnishment. A friendly letter to the creditor stating that the employee is no longer in the employer’s records or other information is unavailable is insufficient. The creditor can go to court and obtain a default judgment for the entire amount of the debt because the employer did not properly respond to the writ.
Employers are responsible for managing the priorities and amounts
Additionally, if an employee has multiple creditor problems and those creditors have all obtained a writ of garnishment, employers are responsible for managing the priorities and amounts of the various writs. This can be challenging for an employer to correctly manage. For a one time, $6.00 fee, employers must calculate, deduct, and remit payments, in addition to accommodating other obligations the employee-debtor may have.
How to lessen your risk of direct employer liability
To lessen the risk of being responsible for an employee’s debt, employers should establish a detailed process of addressing writs of garnishment that begins when the writ arrives in the mail, carries through the calculation process and the final step of properly serving the disclosure. In Michigan, an employer is not required to retain counsel to respond to a writ of garnishment but this creates an interesting scenario where the creditor is represented by counsel and the employer that is at risk for the entire debt of the employee is not necessarily represented by counsel. Retaining an attorney to advise and evaluate your garnishment process is recommended to lessen your risk of direct employer liability.
Dan A. Penning