Thursday, April 30, 2015

Michigan Enacts Garnishment Reform Legislation

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On April 14, the Michigan governor signed legislation that will reform the state's garnishment process (H.B. 4119 and H.B. 4120). The new legislation will go into effect on September 30, 2015.

Currently, garnishments expire after 182 days (six months) and have to be reissued. Under the new law, garnishments will remain in effect until they are paid in full or released. This will allow for a one-time set up in an employer's payroll system. There will also be an increase in an employer's administrative fee to $35. This will be paid by the creditor when a writ is served. Currently, the fee is $6, which is not enough to compensate employers for their costs.

Under the new legislation, when there is a failure to comply with an order creditors must notify employers of any errors, and the employer has several opportunities to comply. There will be no more quick default judgments obtained without actual notice. In addition, if there is default judgment employers may recover money they pay towards an employee's debt. They can withhold from an employee's wages without written consent in the following ways:

  • Give the employee written notice at least one pay period in advance.
  • If deduction is no more than 15% of gross wages.
  • If deduction is made after other deductions, including those required or permitted by law or authorized by the employee.
  • If deduction does not reduce employee’s wages below minimum wage (Michigan’s minimum wage is $8.15/hour).

Other provisions of the new legislation will help bring clarity to the garnishment process:

  • The garnishment order is invalid if sent to an employer’s branch or local office.
  • The creditor must report the balance of the debt at least every six months.
  • The creditor must file a release of the garnishment within 14 days after judgment is satisfied.

The APA provided support throughout the legislative process for the new legislation. The APA's Government Relations Task Force (GRTF) Child Support and Other Garnishments Subcommittee advocated for the passage of the new legislation and submitted statements of support to the Michigan House and Senate.

Read PayState Update Issue 9, Vol. 17 for more details on Michigan's new legislation.