When you have money problems, the last thing you want to be worried about is losing your job. Unfortunately, that's exactly what can happen if you get one too many wage garnishments. Though federal and state laws do provide some protection to debtors against being terminated solely for having creditors attach your wages, it may not be enough to keep you from getting a pink slip. Here's what you need to know about your rights and a couple of ideas on how to stop your employer from giving you the boot.
State and Federal Protections
According to the U.S. Department of Labor, federal law prohibits employers from terminating employees for having their wages garnished to satisfy any one debt, regardless of the number of attachments the creditor may place against the person's wages. For instance, you cannot be fired if one creditor garnishes your wages for one debt, releases the garnishment, and then attaches your wages again for the same debt at a later date.
However, you lose this protection if more than one creditor garnishes your wages or a single creditor does so for more than one debt. You default on two credit cards you have with one bank, for example. You could legally lose your job if the bank places a separate levy against your income for each of those debts.
Sometimes, though, state laws may provide additional protection for debtors in this area. In Connecticut, an employer can only discipline, suspend, or fire you if you have more than 7 wage garnishments in one year.
Any employer who violates the law may be subjected to fines, sanctions, and/or jail time. In Maryland, an employer can be fined up to $10,000 or sentenced to one year in jail for firing an employee who's been garnished by a creditor.
Reasons Why an Employer May Terminate
Despite the potential penalties they may face, some employers may still attempt to get rid of employees who have their wages levied by creditors. One common reason given is that dealing with a wage attachment involves quite a bit of time and effort. The paperwork must be processed and payments sent to the creditor within a certain amount of time.
A second and related reason is the employer can be held legally liable for paying the debt and other damages if it mishandles the employee's wage garnishment. For instance, in Michigan, the creditor can obtain a default judgment against the employer if the company fails to file a garnishment disclosure with the court within 14 days.
A third objection many employers have is the cost. Employers must pay a processing fee for each payment sent in (e.g. $3 per pay period in Louisiana).
Some employers may also fear that a person's financial circumstances may negatively impact the individual's job performance or ethics. They may think the person will steal from the company to make up the lost wages, for example. Therefore, they may seek to get rid of employees with garnishments as a loss prevention tactic.
Avoiding Getting Fired
While the law prohibits employers from firing employees for wage garnishments, a determined employer will often find a way around this restriction. In states with right-to-work laws, an employer can fire an employee for any non-protected reason or no reason at all, though there is a risk of being sued for discrimination if the employee can prove the wage garnishment was the motive for his or her termination. To avoid this, some employers may manufacture a reason or suddenly make unreasonable demands of the employee in the hopes the person will quit.
Regardless, if you feel you may be fired because of a wage garnishment, there are a couple of things you can do. One option is to either negotiate alternative payment arrangements with the creditor or find a way to pay the debt in full. Since the creditor may see the wage attachment as a guaranteed way to get the debt paid, the company may not be as willing to negotiate. However, the creditor may be more amendable if you stress the legal action will result in you losing your job (and thus no more money for them).
Another option is to file for bankruptcy. If you're finances are in such a state that creditors have resorted to garnishing your wages to pay debts, then filing for chapter 7 or chapter 13 bankruptcy may be the best option available for getting your financial house in order. A bankruptcy filing will immediately terminate most creditor collection actions including wage garnishments and give you an opportunity to get your money sorted out.
For more ideas on handling a wage garnishment or assistance with filing for bankruptcy, contact a bankruptcy lawyer like John G Rhyne Attorney At Law.
Share23 June 2015
Too many single people assume they don't need to plan their estate. My brother fell into this category, and his unexpected passing left our entire family struggling to deal with his home, belongings, and financial accounts. It took nearly three years for the courts to set up a deal because he left no paperwork detailing how he wanted his estate divided. The situation immediately convinced me to work on my own estate, even though I'm still in my early 30's and don't have children or a spouse to worry about. Since it's a little harder to pick beneficiaries and estate managers when you're single, I collected the resources I used for making my own decisions and decided to publish them here on my blog. Use these resources before talking to an estate planning attorney so you're prepared for making hard decisions.