An employee of mine (here in SC) has unpaid student loans from California. A collection agency has been calling at the business, etc. They sent a wage garnishment notice "Order of Withholding From Earnings". This is not a document issued by a court. It looks like something done with MS Word. The header is from the Cal Student Aid Commission, C/O (the collection agency). The signature is the collection agency.

Is this a legal document if it is not issued by a court? We do not want to deduct earnings from our employee illegally. They want us to tell them how much we will deduct and send to them. If this is not a legal document then it must border on mail fraud.

Thanks for any advice.

Levi Groons

The sheriff or other levying official presents your employer with garnishment papers, ordered by a judge, after a case has been made to the court. Ordering the employer to take out a certain amount each time their paid, until the debt is paid off. The law requires an employer to withhold the correct amount from their paycheck or be legally liable for it. I would think that some third party would have contacted you, not the collection agency itself. It almost sounds like they are trying to improperly garnish wages. I think that's fraud actually.
The labor dept or Consumer Credit Protection Act should be able to confirm these things.


An employee of mine (here in SC) has unpaid student loans from California. A collection agency has been calling at the business, etc. They sent a wage garnishment notice "Order of Withholding From Earnings". This is not a document issued by a court. It looks like something done with MS Word. The header is from the Cal Student Aid Commission, C/O (the collection agency). The signature is the collection agency.

Is this a legal document if it is not issued by a court? We do not want to deduct earnings from our employee illegally. They want us to tell them how much we will deduct and send to them. If this is not a legal document then it must border on mail fraud.

Thanks for any advice.

Levi Groons

You may want to contact your company attorney, it appears that in California, Federal backed student loans can be collected though administrative action by garnishment without court action.
What I am reading is it will be done on a merely official notice of a collection agency.

http://www.sco.ca.gov/ppsd/scoltrs/payr/2000/00-007.pdf

This is the Califorina office that that may apply you more info
California Student Aid Commission (http://www.csac.ca.gov/)

I wonder how that would work since there are two states involved.
you may want to contact your company attorney, it appears that in California, Federal backed student loans can be collected though administrative action by garnishment without court action.
What I am reading is it will be done on a merely official notice of a collection agency.

http://www.sco.ca.gov/ppsd/scoltrs/payr/2000/00-007.pdf

This is the Califorina office that that may apply you more info
California Student Aid Commission (http://www.csac.ca.gov/)

That is a valid point (2 states involved), I plan on contacting the State Attorney General's office today. The guidelines outlined in the Payroll Letter do not address that issue.

If legally required we will, of course, comply. This collection agency has tried to browbeat us before, I want to put an end to the issue. Either they can do it or not. I don't have the time to waste, they probably know this and intend on hassling us until we do their work for them.

Again, thanks very much for the advice.

An update; I contacted the State Dept of Labor and sent them the document. They called back and said it was a valid order and that we had to comply.

A very strange way of doing things in my opinion. I think that it is the only way I have ever heard of wage garnishment without a court order.

Again, thanks for helping out on this one.

Levi

[QUOTE=Groons]An update; I contacted the State Dept of Labor and sent them the document. They called back and said it was a valid order and that we had to comply.

A very strange way of doing things in my opinion. I think that it is the only way I have ever heard of wage garnishment without a court order.

Again, thanks for helping out on this one.



FrChuck had the answer but I recently saw a loan, Federally-insured, which had pretty much the same language - garnishment without a court order, an automatic judgment.

Let's see if I have this right: Groons is an employer in South Carolina? And, you receive "a wage garnishment notice 'Order of Withholding From Earnings'. This is not a document issued by a court." You were going to contact the attorney general's office, but spoke with someone in the Department of Labor? At this point, I don't have an opinion, but I do not believe a garnishment filed in one state is worth anything filed in another state; the reason being that the first state cannot enforce a wage deduction in the second state. You should understand that if you wrongfully (but in good faith) deduct from your employee, you will owe the employee. You should take this document(s) to your attorney for an opinion.

Student loan is FED-insured, cannot be wiped out under chapter 7, and wage garnishment notice can be issued w/o court order.
Don't waste you $$ with attorney... just pay back the loan.

Well, well; check this: Administrative Wage Garnishment - A Guide For Employers (http://www.ed.gov/offices/OSFAP/DCS/awg.employers.guide.html)

Good thinking
Well, well; check this: Administrative Wage Garnishment - A Guide For Employers (http://www.ed.gov/offices/OSFAP/DCS/awg.employers.guide.html)

Yes, I am an employer in SC. The AG office will only issue advice to another State agency, not to me. My attorney referred me to the State Labor Dept who did the research and called me back. "Pay up sucka" was, in essence, the message. In other words, we get to use up our time to administer a non-court ordered wage garnishment issued by another state, collect the money and send it to a collection agency. If we don't we are in violation of a Federal law and are responsible for the owed wages. If I fire or let the employee go I have to prove that it wasn't because of the wage garnishment. If it turns out that I am withholding wages illegaly then I am liable for their repayment.

? Maybe the people who wrote this regulation think that as a business owner I have nothing better to do with my time. I didn't make it and I didn't break it, I got no dog in this hunt but I get punished if it isn't done in accordance with their regulations.

That sucks on a multitude of levels...

Yes, I am an employer in SC. The AG office will only issue advice to another State agency, not to me. My attorney referred me to the State Labor Dept who did the research and called me back. "Pay up sucka" was, in essence, the message. In other words, we get to use up our time to administer a non-court ordered wage garnishment issued by another state, collect the money and send it to a collection agency. If we don't we are in violation of a Federal law and are responsible for the owed wages. If I fire or let the employee go I have to prove that it wasn't because of the wage garnishment. If it turns out that I am withholding wages illegaly then I am liable for their repayment.

? Maybe the people who wrote this regulation think that as a business owner I have nothing better to do with my time. I didn't make it and I didn't break it, I got no dog in this hunt but I get punished if it isn't done in accordance with their regulations.

That sucks on a multitude of levels.....



Unfortunately this is very time consuming for any employer - even a Court-ordered wage garnishment burns up time. My experience has been I also have to argue about the legality of the Order with the employee (no one ever has ANY idea there's a Judgment, let alone a garnishment but, wait, they have a vague memory of getting papers some time about something and, of course, they did not respond) and on occasion the employee decides to quit and see if the creditor can find them a second time.

I've had employees suggest that they quit and then I rehire them and then the garnishment is no longer in effect because they'd be new employees and then...

It's a mess but I don't know any other way creditors can get paid.

? Maybe the people who wrote this regulation think that as a business owner I have nothing better to do with my time. I didn't make it and I didn't break it, I got no dog in this hunt but I get punished if it isn't done in accordance with their regulations.

That sucks on a multitude of levels.....

What really sucks is the student who reneges on his loans. I think your ire is a bit misplaced, since the agency is simply trying to collect on a valid debt. Whether they are being draconian about it or not is another issue. As the link George provided indicated, the purpose of this administrative garnishment is to provide incentive to the student to pay voluntarily.

Why not go to the student and tell him he would be better off if he repays voluntarily.

First of all, I do appreciate your comments and I don't intend to get into a long discussion about it, it's a done deal. But, I certainly don't think my ire is misplaced in the least. As I said, I have no dog in this hunt, but have been made a party to this action, that takes my time and effort, simply because I have a business relationship with the miscreant, one that had nothing to do with his student loans.

Tha administrative garnishment is absolutely no incentive to pay off his loan voluntarily why would it be? He wasn't paying it before, the threat of garnishment certainly didn't have any effect. They are being draconian about it, that is the issue and that is because we are probably the only way they can easily seize his money.

First of all, I do appreciate your comments and I don't intend to get into a long discussion about it, it's a done deal. But, I certainly don't think my ire is misplaced in the least. As I said, I have no dog in this hunt, but have been made a party to this action, that takes my time and effort, simply because I have a business relationship with the miscreant, one that had nothing to do with his student loans.

Tha administrative garnishment is absolutely no incentive to pay off his loan voluntarily why would it be? He wasn't paying it before, the threat of garnishment certainly didn't have any effect. They are being draconian about it, that is the issue and that is because we are probably the only way they can easily seize his money.


You are in business - as am I and many other people who post regularly. Your employee owes money but hasn't paid. I assume your business invoices people - some pay, some don't.

How would you suggest that the employee/debtor be "encouraged" to repay his/her student loans - like all the rest of us did?

What do you do when people don't pay you? Do you just let it go? I know I don't. I couldn't afford to. I hesitate to develop business relationships with people who don't pay their debts - I personally feel it's a reflection on their general character and ethics.

I'd be happy to hear some other solution to collecting unpaid debts.

I did indeed encourage him to work with them, but that is sort of beside the point. If you (JudyKayTee) entered into a contract with someone, say the State of NY before you ever became associated with my company, why is it now my responsibility to help remedy any default you may have caused?

They loaned him the money, they should find a way to get it back without making us part of their solution. We didn't have anything to do with this. But, it's easy to make us an unwilling agent of collection, so they do.

That being said, he is a good and valuable employee and is an asset to the company.

They loaned him the money, they should find a way to get it back without making us part of their solution. We didn't have anything to do with this. But, it's easy to make us an unwilling agent of collection, so they do.


I'm sorry but I don't agree with you. This situation occurred because your employee neglected (for whatever reason) to pay back money he borrowed. The entity he borrowed from has a right to try and recover this money. I'm sure they have dunned him and tried to make payment arrangements all of which he has apparently refused, so they were forced to resort to a garnishment. While it may have a negative affect on your business processes, you became involved when you hired him.

As for incentive, the law allows them to deduct 15%. If he tried working with them, he may have been able to negotiate lower payments.

I did indeed encourage him to work with them, but that is sort of beside the point. If you (JudyKayTee) entered into a contract with someone, say the State of NY before you ever became associated with my company, why is it now my responsibility to help remedy any default you may have caused?

They loaned him the money, they should find a way to get it back without making us part of their solution. We didn't have anything to do with this. But, it's easy to make us an unwilling agent of collection, so they do.

That being said, he is a good and valuable employee and is an asset to the company.


That's our basic non-meeting of the minds (? ) here - YOU are mostly definitely not responsible for remedying any default he may have caused. HE is. He just hasn't stepped up to his responsibility so by hiring him you have become his "responsible person." You aren't paying back the creditor - he is. You are "merely" the conduit. I don't know what accounting system you use but once your books are set up for a garnishment in my experience it's no big deal.

I'm glad he's taking advantage of the free eduction (so far) and is a good and valuable asset to your company - I could not get him bonded with an outstanding debt of this nature nor could I trust his word (he promised to pay, he did not) so he could not work for me. He may be a great guy in every other respect but I would not trust him around my books, cash register, receivables.

If everyone walked away from student loans there would be no student loan money for students walking behind "us." I paid for my education, I'm sure everyone else here paid for theirs and I don't want to pay for "his."

That being said - he HAD the option of paying directly. In fact, you say you encouraged him to do so and he refused. He has taken the easy way out for HIM (having the money subtracted from his paycheck) and you are blaming the wrong people - the State, the creditor - instead of your employee who caused you this inconvenience by not paying his legitimate debts.

If everyone walked away from student loans there would be no student loan money for students walking behind "us." I paid for my education, I'm sure everyone else here paid for theirs and I don't want to pay for "his."


I meant to say something like that. By defaulting on his student loans, your employee is causing a ripple effect. He is making the cost of collecting on the loans go up. Since the government subsidizes those loans, then have to pay those costs. This means tax dollars are going to pay for his refusal to pay his debts. That could cause a rise in taxes to pay for the subsidy. This could also mean that interest rates for student loans can go up and student loan money can dry up.

So this is not really an isolated issue.

I agree with much of what you both have said from philosophical point of view but I most certainly disagree that I have become his "responsible person". I obviously cannot, as you said, be held responsible for his actions prior to employment then magically become responsible for them after I hired him. The government wants it both/all ways; I am prohibited, by law from refusing to hire him if he has, or is going to have, his wages garnished. I am prohibited, by law, from letting him go because his wages are garnished.

He is an employee, I'm not his legal guardian or his daddy. I am no more responsible for his prior actions than you are. But, the government has boxed me in and forced me to be a party in this matter. Is it a dire inconvenience or threatened my business welfare? Of course not. But is not right on any level that can be argued.

I agree with much of what you both have said from philosophical point of view but I most certainly disagree that I have become his "responsible person". I obviously cannot, as you said, be held responsible for his actions prior to employment then magically become responsible for them after I hired him. The government wants it both/all ways; I am prohibited, by law from refusing to hire him if he has, or is going to have, his wages garnished. I am prohibited, by law, from letting him go because his wages are garnished.

He is an employee, I'm not his legal guardian or his daddy. I am no more responsible for his prior actions than you are. But, the government has boxed me in and forced me to be a party in this matter. Is it a dire inconvenience or threatened my business welfare? Of course not. But is not right on any level that can be argued.


Ahh, but you are his responsible person in the sense that you are in control of his paycheck - and you must turn a portion over to his creditor before you hand it over to him. I never said you were responsible for his prior actions.

In in my eyes he is the one inconveniencing you, not the Government.

Just out of curiosity - was there a Judgment when you hired him and did it show up on the background check?

Ahh, but you are his responsible person in the sense that you are in control of his paycheck - and you must turn a portion over to his creditor before you hand it over to him. I never said you were responsible for his prior actions.

In in my eyes he is the one inconveniencing you, not the Government.

I still cannot quite grasp the concept of why I am responsible for him because I pay him to work for me. I must turn over a portion of his paycheck merely because the government says I must and for no other reason. I don't have to pay his landlord or his truck payment out of his paycheck before I hand it over to him. And, I wasn't being inconvenienced before the government stepped in.

The garnishment obviously just took place so it was not in place when I hired him.

I still cannot quite grasp the concept of why I am responsible for him because I pay him to work for me. I must turn over a portion of his paycheck merely because the government says I must and for no other reason. I don't have to pay his landlord or his truck payment out of his paycheck before I hand it over to him. And, I wasn't being inconvenienced before the government stepped in.

The garnishment obviously just took place so it was not in place when I hired him.

You aren't responsible for him, but you ARE responsible to his legal creditors if he defaults on his debts. And the responsibility for his default rests squarely on HIS shoulders. This is what Judy and I have been trying to explain. Your ire at the creditor for forcing you to incur the inconvenience of processing the garnishment is misplaced. Its your employee who is forcing the creditor's hand by reneging on his legal obligation. The creditor is only using a garnishment because other attempts to collect have failed.

If he defaulted on his truck payment, its possible the creditor would use the tool of a garnishment as well and you would then be responsible for making those payments. What you are doing is shooting the messenger, not there author of the message.

Ahh, but you are his responsible person in the sense that you are in control of his paycheck - and you must turn a portion over to his creditor before you hand it over to him. I never said you were responsible for his prior actions.

In in my eyes he is the one inconveniencing you, not the Government.

I still cannot quite grasp the concept of why I am responsible for him because I pay him to work for me. I must turn over a portion of his paycheck merely because the government says I must and for no other reason. I don't have to pay his landlord or his truck payment out of his paycheck before I hand it over to him. And, I wasn't being inconvenienced before the government stepped in.

The garnishment obviously just took place so it was not in place when I hired him.



Was the Judgment on file when you hired him - I realize the garnishment was not. Curious to see if it showed up on his background check.

There was no judgement, but the defaulted loan might have shown up.

There was no judgement, but the defaulted loan might have shown up.


Good catch - thanks.

You aren't responsible for him, but you ARE responsible to his legal creditors if he defaults on his debts. And the responsibility for his default rests squarely on HIS shoulders. This is what Judy and I have been trying to explain. Your ire at the creditor for forcing you to incur the inconvenience of processing the garnishment is misplaced. Its your employee who is forcing the creditor's hand by reneging on his legal obligation. The creditor is only using a garnishment because other attempts to collect have failed.

If he defaulted on his truck payment, its possible the creditor would use the tool of a garnishment as well and you would then be responsible for making those payments. What you are doing is shooting the messenger, not there author of the message.

I'm not a lawyer and have not studied the law other than in college as part of my business degree.

How can you say that I'm responsible to his legal creditors for his defaults? Where is there any law or precedent that can be sited for such a statement? Educate me here. In my 3 decades of business I cannot remember of an employee's wages being garnished for any debt other than for child support, certainly not a consumer debt.

Again, you can't have it both ways; if I am not responsible for him then I am not responsible to his creditors. And from a legal standpoint I certainly am not responsible for contracts or obligations he entered into that I had no part in.

What you are doing is trying to justify the government using its ultimate power to force me to do something merely because it can make life unpleasant for me if I don't. Not because I have any responsibility for these actions but because it is easier to make me collect and send them the money that for them to actually go and get it themselves.

You keep trying to make me a party to the beating up of the employee for his past transgressions. That isn't my job. I am only concerned and responsible for his actions as they concern our clients and the work we do for them, it would be unacceptable for me to meddle his personal life, I'm sure you would agree.

I disagree with you (surprise) on several issues - specifically:

You have used the "you are not responsible for paying for his truck or his rent" argument before. If the finance company/bank or landlord obtains a Judgment against him and garnishee his wages you are responsible for collecting from him on their behalf. No one is saying you should pay his debts - although I have suggested that if this is such an inconvenience for you and he's a good, valued employee that you pay the student loan and just have him make payments to you. Maybe his word to you is better than his word and signature on a contract where the Federal Government is involved.

You don't remember another garnishment in the past 30 years you've been in business because your other employees have paid their debts - with the exception you quoted, child support.

If you feel as strongly as you apparently do on this subject you have other options - don't send the money and see what the Government's other options are. I never recommend civil disobedience unless you feel very strongly and apparently you do - so don't forward the monies on. Hire an Attorney and fight it - people fight income taxes every year on the grounds that the Government has no authority to tax. Take up the fight and set precedent.

I personally find it an inconvenience to have to withhold taxes from my employees' salaries and then forward them to the Government - without the necessity to withhold I wouldn't need a payroll service. While you're protesting I would take a look at this, too.

I have already explained why you as his employer are responsible for collecting from him so I'm not addressing that part.

Your employee has made you a party to his past transgressions, not the Government - he did have the option of paying this debt but I am gratified that you see his failure to pay as a transgression (your word).

Other than that I guess we agree to disagree -

Contact your senator, Lindsey Graham: United States Senator Lindsey Graham, South Carolina : Contact (http://lgraham.senate.gov/public/index.cfm?FuseAction=Contact.OfficeLocations)

The collections on student loans are much more liberal than on the collection of any other debt, but I'm still not sure a collection agency can garnish wages nor should they be able to call his place of employment. From my understanding, collection agencies are never allowed to speak to an employer about an employees debt. They can get a court order (but it must be court order) to garnish wages. Before I did anything, I would call the department of education's financial aid office and find out their procedure for collecting the debt. I would NEVER pay the collection agency based on their bogus letter. They are not allowed to represent themselves as legal organizations. That's illegal. I'd do further research and contact the Better Business Bureau and the Federal Organization that oversees collection agencies. This does not sound legal to me, even if the employee owes the debt. CYA

The collections on student loans are much more liberal than on the collection of any other debt, but I'm still not sure a collection agency can garnish wages nor should they be able to call his place of employment. From my understanding, collection agencies are never allowed to speak to an employer about an employees debt. They can get a court order (but it must be court order) to garnish wages. Before I did anything, I would call the department of education's financial aid office and find out their procedure for collecting the debt. I would NEVER pay the collection agency based on their bogus letter. They are not allowed to represent themselves as legal organizations. That's illegal. I'd do further research and contact the Better Business Bureau and the Federal Organization that oversees collection agencies. This does not sound legal to me, even if the employee owes the debt. CYA



Did you read the entire thread? The OP contacted the State Attorney General's Office - it's legal and everything is in place.

Read the responses again about collection agencies and this specific loan.

No, she contacted the State Department of Labor. I would not take the word of someone who answered the phone there as you can get a different answer every time. If she can end up liable if she makes a mistake on this, I'd do further research before I just caved and did what they asked. AND I'd make sure whatever they say is put in writing. They'll say they never said it if they're wrong in the end. Cross your Ts and dot your Is.

You are correct - the OP contacted the State Department of Labor and sent them a copy of the Order - they said it was legal.

FrChuck quoted the law - what further research would you personally recommend (keeping in mind that the employer may or may not be under an order to comply and time is running out)?

Cross your Ts and dot your Is.

Yes please do. If you had, you would have seen that the issue of the legality of the order was long ago settled.

Okay, so what does this phrase from the states fair debt collection page mean?

South Carolina Wage Garnishment

Wage attachment is prohibited in South Carolina. SCCLA 37 -5-104.

Okay, so what does this phrase from the states fair debt collection page mean?

South Carolina Wage Garnishment

Wage attachment is prohibited in South Carolina. SCCLA 37 -5-104.


Okay - here's what the Statute you posted says: "

BANKRUPTCY PROPERTY EXEMPTIONS (Code of Laws of South Carolina):

Can use either the federal exemptions or state exemptions below

The State of South Carolina has exempted the property and income below from seizure by the bankruptcy court to pay creditors:"

We aren't discussing bankruptcy here.

That's not the whole of it. Creditors CANNOT garnish employee wages in the state of South Carolina for debts owed. It just not just pertain to bankruptcy. I just called a lawyer friend who lives there and he is adamant that the law is very specific that you cannot garnish wages in the state of South Carolina, PERIOD.

That's not the whole of it. Creditors CANNOT garnish employee wages in the state of South Carolina for debts owed. It just not just pertain to bankruptcy. I just called a lawyer friend who lives there and he is adamant that the law is very specific that you cannot garnish wages in the state of South Carolina, PERIOD.



Well, it's happened here and this is more of your not being able to quote the law but "having an Attorney friend."

Amazing that you were able to reach your Attorney friend in the 3 minutes since I questioned you.

Here's the SC law (according to my Attorney friend): "S.C. does not have a code that directly forbids garnishment of wages -" It goes on to say that the "average" creditor would have great difficult but there are exceptions - student loans, for example, child support.

Maybe our friends should talk -

Maybe they should. I'm not saying the Federal government doesn't have a law that would override the state's, but there is a no wage garnishment statute in the state of South Carolina.

Wage Garnishment and Bankruptcy Exemptions -- South Carolina
WAGE GARNISHMENT EXEMPTION: 100 percent of wages exempt


And I was looking it up well before you answered--amazingly enough, the world doesn't revolve around your answers.

If I were her, I would not proceed with garnishing an employee's wages without written notification from either the federal government or the state of South Carolina. I certainly would not do it because someone told me to over the phone based on a collection agency's say so. She needs legal advice so she does not end up on the wrong end of this.

Maybe they should. I'm not saying the Federal government doesn't have a law that would override the state's, but there is a no wage garnishment statute in the state of South Carolina.

Wage Garnishment and Bankruptcy Exemptions -- South Carolina
WAGE GARNISHMENT EXEMPTION: 100 percent of wages exempt


And I was looking it up well before you answered--amazingly enough, the world doesn't revolve around your answers.

If I were her, I would not proceed with garnishing an employee's wages without written notification from either the federal govenment or the state of South Carolina. I certainly would not do it because someone told me to over the phone based on a collection agency's say so. She needs legal advice so she does not end up on the wrong end of this.


You didn't say you looked it up - you said you called an Attorney friend, I disagreed and I posted the exact language - you continue to post the Bankruptcy portion of the code.

Amazingly enough on this topic the World DOES revolve around my answer - and the answers of everyone else who has posted on this thread.