garnishment under nd law Amy L. De Kok, legal counsel, NDSBA

What is garnishment? The withholding of an individual’s wages to pay a debt. The withholding of property (non-wages) held by a third-party, i.e. bank account. A creditor can only attempt to withhold or “garnish” a debtor’s wages if they have a valid judgment against the debtor from a court of competent jurisdiction. NDCC Chapter 32-09.1.

Garnishment process Debtor served with Notice Before Garnishment: Notifies the debtor that a garnishee summons that requires withholding of wages may be served on employer. Garnishee summons may be served any time after ten (10) days from the issuance of the Notice. Served personally or by first-class mail. If Notice is not served on debtor, any subsequent garnishment is rendered void. In addition to Notice, creditor must serve a garnishment debtor’s list in the form required by ND law (i.e. dependents and social security numbers).

Garnishment process (cont.) Ten days or more later, debtor’s employer served with Garnishee Summons: Instructs employer to withhold wages. Copy also served on debtor employee. Includes amount of judgment debt remaining unpaid and retention amount. Retention amount = amount of judgment unpaid, $125, and 9 months of interest on unpaid amount. Garnishee = employer (or person holding earnings or property of debtor).

Garnishment process (cont.) Disclosure form served with garnishee summons to be completed by employer and returned to creditor plaintiff. Plaintiff must tender $25 to garnishee as fee for making disclosure. Garnishee summons may be directed to one or more garnishees. May also serve interrogatories (i.e. questions) along with garnishee summons and disclosure form. NOTE: No employer may discharge any employee by reason of fact that earnings are or have been subject to garnishment. Employee can bring civil action to recover twice wages lost and for an order requiring reinstatement.

Disclosure form Employer must complete disclosure form under oath and serve upon creditor plaintiff (or plaintiff’s attorney) within time period stated in garnishee summons. The amount of disclosure need not exceed retention amount. Disclosure form must include certain items as provided in NDCC § 32-09.1-09. Earnings worksheet to calculate amount of earnings subject to garnishment. “Adverse interest or setoff” can include other garnishments being withheld from earnings. Disclosure signed by agent with knowledge (i.e. business manager).

How much of employee’s wages can be withheld? Restrictions on amount of earnings that are subject to garnishment in a workweek. NDCC § 32-09.1-03 “Aggregate Disposable Earnings” = that part of the earnings of any individual after deduction of any amounts required by other law to be withheld, which include: Federal Income Tax; State Income Tax; and, FICA (social security/medicare). Total earnings in pay period minus deductions allowed by law equals disposable earnings.

Calculation of Garnishment amount The maximum amount of disposable earnings for any workweek which is subject to garnishment MAY NOT EXCEED THE LESSOR OF: Twenty-five percent (25%) of individual’s wages OR The difference between the individual’s wages and forty (40) times the Federal minimum wage. EXCEPTION: if garnishment is for support of a spouse or child, 50 – 65% of wages can be withheld. Also – does NOT apply to bankruptcy court order or state or federal tax debt.

Calculation of garnishment amount (cont.) For example: Teacher takes home (after deductions allowed by law) $500 per week. 25% of $500 is $125 $7.25 x 40 hours is $290. Subtracting $290 from Teacher’s wages of $500 is $210 Employer must withhold the lesser of these two amounts ($125) weekly. HOWEVER, Teacher is entitled to deductions for any dependents.

Dependent deductions Allowed to deduct from amount withheld $20 for each dependent family member living with garnishment debtor. To claim dependent deductions, garnishment debtor must file a verified list of dependents with employer within ten (10) days of receipt of garnishee summons. List must include names and social security numbers of dependents. If amount is less than $10 after dependent deductions, then nothing can be withheld.

What happens next? Once you complete and return the disclosure form, you must retain wages subject to garnishment in a given workweek, but DO NOT RELEASE TO CREDITOR UNTIL: Served with a writ of execution; OR Debtor authorizes release to the plaintiff creditor. Must retain earnings/wages/property for a period of 360 days. If no writ or agreement to release, then must return earnings/wages/property to debtor.

CONTINUING LIEN ON WAGES Garnishee summons and disclosure form likely going to include a continuing lien on wages (must be marked in caption on garnishee summons). This means that garnishee must continue to hold non-exempt portion of earnings as the earnings accrue: Through the last payroll period ending on or before 270 days from effective date of garnishee summon; OR Until the sum held equals the amount state in garnishee summons; OR Until employment terminated.

TERMINATION OF GARNISHMENT If amount required to be retained is less than $10, garnishee cannot retain any amount, but must still complete disclosure. A garnishee summons lapses and garnishee is discharged of any liability upon the expiration of 360 days after service of summons (or longer if agreed by parties or ordered by court). Immediately upon lapse of garnishee summons, all earnings retained MUST be returned to debtor if otherwise legally entitled to earnings.

Common garnishment questions What earnings are subject to garnishment? Wages/salary Commission Bonus Periodic payments to a pension or retirement program Military retirement pay Can earnings be subject to multiple garnishments at same time? YES, but cannot exceed maximum amount of aggregate disposable earnings First in time paid first.

Common garnishment questions (cont.) Does a garnishee employer have to garnishee earnings based on out-of-state judgment? Yes, but garnishee summons MUST be issued by ND court. Out-of-state judgment transferred to ND for collection. What if school business manager is debtor? MUST be handled by someone other than business manager.

QUESTIONS?