By: Claudia D. Orr
There is good news for employers. Michigan Public Act 14 of 2015 was just signed into law by Governor Snyder and it will provide some relief for employers when employee wages have been garnished. In short, it will lessen the administrative burden and increase protection and compensation for the employer.
Specifically, the Act establishes the priorities for withholding from an employee’s wages (child support, tax lien, and lastly any garnishments in the order in which they are received). For a garnishment of periodic payments, the plaintiff will be required to send a statement to the garnishee (employer) and defendant (employee) every 6 months setting forth the balance owed on the judgment (including interest and costs). And, within 21 days after the judgment has been paid in full, the plaintiff must provide the garnishee and defendant with a release of garnishment.
The Act provides significant safeguards protecting employers from default judgments. A default cannot be requested against the garnishee of periodic payments unless –
(a) the garnishee fails to file a disclosure within 14 days after service of the garnishment or fails to perform any other required act, and the plaintiff has served on the garnishee a notice of failure setting forth the required act or acts that the garnishee has failed to perform; and
(b) the garnishee has failed, within 28 days after the date of service of the notice of failure to cure the identified failure by mailing to the plaintiff and defendant a disclosure certifying that the garnishee will immediately begin withholding any available funds pursuant to the garnishment as provided by statute or court rule, or has commenced performing any other required act.
If both of the above requirements have been met, the plaintiff must send a copy of the request for entry of a default by certified mail to the garnishee. Then, after entry of a default, but before entry of a default judgment, the garnishee will again have the right to cure the identified failure.
After a default judgment has been entered, and upon motion by the garnishee, the court shall do 1 or more of the following, as applicable:
(a) if the garnishee certifies by affidavit that its failure to comply with the garnishment was inadvertent or caused by an administrative error, mistake, or other oversight and it will immediately begin withholding, reduce the default judgment to not more than the amount that would have been withheld if the garnishment had been in effect for 56 days; or
(b) if any of the following circumstances exist, set aside the default judgment: (i) the garnishee was not liable to the defendant for any periodic payments after service of the garnishment, (ii) the garnishment, notice of failure, request for entry of a default, or request for default judgment was not properly served or sent as required, or (iii) the notice of failure was materially inaccurate or incomplete.
The Act will also require the plaintiff to pay a $35 fee to the garnishee at the time a garnishment of periodic payment is served to help defray the garnishee’s costs. This Act, which is only summarized above, takes immediate effect but applies only to writs of garnishments issued after September 30, 2015.
If you have any questions concerning garnishments or any other employment issues, contact the author or another attorney who specializes in employment laws.
This article was written by Claudia Orr, who is the chair of the Legal Affairs Committee, and an employment attorney at Plunkett Cooney in its Detroit, MI office. She can be reached at 313-983-4863 or firstname.lastname@example.org.
Detroit SHRM encourages members to share these articles with others, inside and outside their organization as long as its name and logo, and the author’s information, is included in the re-post of the article. April 2015.