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.

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Originally Posted by Groons

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

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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

I wonder how that would work since there are two states involved.

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Originally Posted by Fr_Chuck

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

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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

Good thinking

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Originally Posted by George_1950

Well, well; check this: Administrative Wage Garnishment - A Guide For Employers

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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...

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Originally Posted by Groons

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.....

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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.

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Originally Posted by Groons

? 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.....

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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.

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Originally Posted by Groons

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.

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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.

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Originally Posted by Groons

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.

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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.

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Originally Posted by Groons

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.

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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.

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Originally Posted by JudyKayTee

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."

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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.