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By: Amy C. Bender
Without much, if any, attention, Georgia’s garnishment laws were amended in ways that will significantly impact continuing garnishments served on employers effective January 1, 2021. Some of the major changes are discussed below.
As background, garnishment is a method by which a creditor may recoup a debt owed by an individual. Once a creditor obtains a judgment in court against the individual for the underlying debt, the creditor can initiate a separate legal action against a business organization that owes money or property to the individual (typically, an employer), which obligates the organization to set aside a portion of the individual’s earnings over a period of time to satisfy the debt – a “continuing garnishment.”
Continuing Garnishments Now Arguably Apply to Independent Contractors
The current statutes address garnishment of “wages earned as the garnishee’s employee” and a continuing garnishment being served on an “employer,” leading to the consensus that continuing garnishments could not be used to recover earnings paid to an independent contractor (albeit with little guidance from the case law). Now, the statutes have been amended to state that a continuing garnishment allows for garnishment of wages or “any sum for goods or services periodically provided to the garnishee” and may be served on an entity that is an employer of “or under periodic obligations for payment to” the indebted individual. Based on these changes, employers likely will have to garnish periodic (although apparently not one-time) payments made to independent contractors.
Time Period of Continuing Garnishment Significantly Expanded
Until now, continuing garnishments had a relatively short shelf life in that entities were required to garnish earnings from each paycheck for a total period of 179 days (roughly 6 months). The amendments expanded that time period to 1,095 days (3 years). As with the current version of the statute, the creditor still will need to file a new garnishment action to recover any amount of the debt outstanding after the 1,095-day period, but this change significantly reduces the frequency of the creditor’s need to do so. The employer’s obligation to garnish will end earlier if the debt is satisfied in full or if the employment relationship/periodic payment obligation terminates.
Continuing garnishments can present pitfalls for employers. In some instances, the failure to respond timely can result in a default judgment leaving the employer on the hook for the entire amount of the debt. FMG’s Labor and Employment Law team can assist your organization with all steps of the garnishment process. If you have any questions or would like more information, please contact Amy Bender at [email protected].