A little garnish with that paycheck? Featured

9:55am EDT July 22, 2002

There was a kind of bitter irony to the timing.

Just as the annual tax crunch was coming to an end April 15th, and the last few employers were filing their last-moment returns, a new government-imposed paperwork burden was taking effect. It could result in a flurry of court summonses, indicating that the targeted employer had just five days to formally respond to garnishment notices.

It all came in mid-April with the March 30th implementation of Ohio’s new garnishment process. The main change, says Alan Weinberg, managing partner of Ohio’s largest “creditors’ rights” law firm, Weltman, Weinberg & Reis, is that the garnishment order is now a continuous instrument.

“Before, the garnishment only applied to one pay,” Weinberg says. “If you [employee] happened to be out sick, tough. And you could only be garnisheed once a month, by any one creditor.”

Now, if there’s more than one creditor trying to reclaim money, “they don’t get kicked out, they get put in line.” Creditors can garnishee up to 25 percent of each paycheck until the debt is fully paid.

Creditors’ advocates, who pushed the changes, are quick to point out that under the new law, their clients won’t be getting any more money than before. To the contrary, the repayments will merely be stretched out over a longer period.

One feature of the new law that creditors especially like is its portability. A creditor seeking repayment will no longer have to chase deadbeats around the state. A garnishment order rendered by Cleveland Municipal Court, for instance, will now have the full force of law throughout the state. And employers will be paid a $10 fee for processing each continuous order of garnishment, which in most cases will be routed through outsourced computerized payroll services anyway.

Nevertheless, some are predicting that it is employers who will be left holding the bag as the new rules sink in. “The courts are prepared for this and the creditors’ law firms are prepared,” says one lawyer. “But the employers don’t have a clue. All of a sudden, they’re going to get all of these continuous garnishment forms.”

On the first day the rules took effect, April 15th, one statewide law firm alone filed 5,000 garnishment orders across Ohio, including 1,100 in Cleveland. “Cleveland Muny Court is probably looking at 3,000-3,500 garnishment proceedings” in all, says one observer.

Some are also concerned that employers faced with multiple garnishments of particular employees will be stuck with an especially tricky accounting issue: the burden will be on them to apply garnisheed wages to the proper creditor when more than one is lined up awaiting payment. If they stumble, the law permits creditors to seek redress under civil liability statutes. Because the regulations themselves provide so little guidance on that complicated issue, some have already begun calling for the Ohio legislature to add technical corrections to the rules.

While it’s widely predicted that the new rules will spur employers to terminate some of the worst offenders, other experts suggest that employers should instead consider using the new regulations as a stimulus for teaching employees how to better manage their finances. Says Nancy Deevers, director of education and community relations for 35-year-old Consumer Credit Counseling Services of Northeast Ohio: “You should maybe think about having us out to do seminars on solving debt problems, as an employee assistance program.”

For more information, contact Consumer Credit Counseling, at (216) 781-8624.