If a wage garnishment is mishandled, employers can become directly liable for their employee’s judgment debt, which could potentially be a five-figure sum. When you add this to the regrettable truth that Michigan is near the top of the list for the volume of wage garnishments issued to collect judgments from the debtor’s employer, the result is that Michigan businesses are at significant risk.
What can you do to minimize the cost and reduce the risk posed by wage garnishments?
The number one root cause of a default judgment is that the person who was (seamlessly and easily) handling these risky matters has left your employ and none of the remaining staff are prepared to fill this talent void. These unprepared employers learn the true value of trained and talented payroll professionals typically when it is too late – after the default judgments start arriving in the mail.
Before this happens to you:
- It is critical that your organization appreciate the risk as well as the difficulty and complexity of compliance;
- Train key employees on an ongoing basis; and
- Identify a garnishment back-up or succession plan.
If you do not have another employee with the knowledge required to seamlessly pick up wage garnishment compliance where the departed employee left off, you’ll pay for this lack of foresight when the default judgements start arriving.
Lastly, securing and/or training people in garnishment compliance may seem easy; but it isn’t. There are no payroll compliance degrees in colleges or universities; instead, the skills required are picked-up primarily though on-the-job training, but also through professional certifications and other training programs offered by a select few organizations, such as the Michigan Chamber of Commerce.
So, in summary, the best protection from wage garnishment risks is to ensure you have trained and talented payroll professionals handling this task.
Contributed by Martin C. Brook of Ogletree, Deakins, Nash, Smoak & Stewart, PLLC.
Join us for the “Wage Garnishment Administration: Reduce Costs & Exposure” seminar on September 27 in Ypsilanti with Martin.