Garnishment Reform Legislation on the Move

February 16, 2015

Legislation being pushed by the Michigan Chamber to reform Michigan’s wage garnishment system is on the move in the Michigan House.

The wage garnishment process is a growing issue for many Michigan employers and can be time intensive and costly. For a one-time $6 payment, employers are required to process employee garnishments, respond to court orders, calculate and withhold from employee’s paychecks for 91-days, and make payments to creditors. One small administrative mistake can expose an employer to the risk of being held liable for the entire bad debt of an employee, former employee or even someone they’ve never met – plus court costs and attorney fees. 

House Bills 4119 and 4120 (Reps. Garcia and McCready) would fix several of the issues employers face with the current garnishment process, including:

  • The bills would essentially put an end to the practice of allowing creditors to pursue a default judgment against the full bad debt of an employee by requiring several notices to the employer of its failure to garnish and give ample opportunity to employers to cure their errors.
  • The bills would specify that a Writ of Garnishment would continue until the debt is paid off (current practice requires renewal every 91 days) and increase the fee creditors pay to administer garnishments from $6 every 91 days to a flat $35 fee. 
  • The bills would make the service of garnishment consistent with the service of other legal documents.
  • The bills would define “garnishment” to help the courts and others better identify what types of court orders qualify as a garnishment, thereby requiring third parties and/or employers to withhold income and remit payment.

This legislation is a real solution to a real issue our members are facing and is intended to address the most serious problems and financial risks associated with the garnishment process while still ensuring the right of creditors to collect monies owed to them. 

For more information, please contact Wendy Block at wblock@michamber.com or (517) 371-7678.

Wage Garnishment webinar