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New Periodic Garnishment Legislation

Business Law

Governor Rick Snyder recently signed into law Public Act 14 of 2015 with important changes to Michigan periodic garnishments, effective immediately. Periodic garnishments now remain in effect until the judgment balance is satisfied, rather than expiring every six months. Fees to employers increase from $6 to $35 per periodic garnishment. In addition, every six months plaintiffs must provide a statement of remaining balance, interest, and costs for the periodic garnishment and must issue a written release of garnishment after the judgment balance is satisfied.

Significantly, the new legislation creates employer limited liability in the event of a default. A “default” means that the employer fails to file a disclosure, fails to withhold the required amount of wages, or fails to perform any other act required by Michigan law. Prior to the legislature’s changes, an employer who defaulted on a periodic garnishment was liable for the entire remaining judgment balance, costs, interest, and reasonable attorney fees. Recognizing that administrative oversights happen, the new legislation creates several new layers of protection for Michigan employers.

Now, if an employer fails to file the required periodic garnishment disclosure within 14 days of receipt, or fails to perform any required act under Michigan law, the plaintiff must serve the employer a written notice of failure. The employer has 28 days to respond to the notice of failure, remedy the mistake, and mail notice to all parties. Even if a court enters a default judgment, employers may now motion the court within 21 days of the entry of a default and seek limited liability and a reduced default judgment.

Clearly, the new legislation signed by Governor Snyder and passed by the Michigan Legislature is welcome news for Michigan employers. Periodic and non-periodic garnishments appear to be simple and routine forms, but in reality, failing to comply with periodic and non-periodic garnishments can lead to problems costing serious money for employers. Contact an attorney at Shinners & Cook with any questions regarding compliance with periodic and non-periodic garnishments or other business or employment law issues.