Companies face continuing uncertainty about the constitutionality of wage garnishments in Georgia. Parts of the Georgia law were declared unconstitutional on September 8, 2015, when federal district court Judge Marvin Shoob ruled the law violated constitutional due process because it failed to notify debtors about legal exemptions to garnishment. A debtor's benefits from Social Security, welfare payments and worker's compensation are legally protected from garnishment, and the Georgia law did not inform debtors of these exemptions and their rights to claim them.

Proceed With Caution

As a result, many court clerks in Georgia have suspended the processing of garnishment claims, which left creditors, debtors, banks and companies in a state of uncertainty that hasn't completely disappeared. Members of the Georgia General Assembly, the state's legislature, began drafting a new bill to "fix" the parts of the Georgia garnishment law struck down by Judge Shoob.

On October 5, 2015, Judge Shoob entered the fray again by declaring that his ruling applied only to financial institutions who received garnishment orders, and not to companies in the state receiving wage garnishment orders. Many of the county clerks who had suspended all garnishments then began processing wage garnishments.

The confusion around Georgia's garnishment law will most likely be cleared up by (1) a federal appeals court decision or (2) passage of a new Georgia garnishment law, neither of which has happened yet. As employment lawyer Carson Penney explained in the Savannah Morning News, "Until guidelines for the accurate implementation of garnishments in Georgia are clarified and finalized, caution is the best policy."

Remove the Unfair Burden

The sponsors of Senate Bill 255 intend to fix the unconstitutional state garnishment law and include provisions that notify debtors of exemptions for Social Security funds, worker's compensation and welfare payments, and how said debtors can claim those exemptions. These provisions should satisfy the due process requirements that Judge Shoob called for, however, the lobbying on SB 255 has begun on other parts of the Georgia garnishment law.

On January 11, 2016, former Georgia legislator and current Vice-President of Hill Manufacturing Kevin Levitas asked that SB 255 lift an "unfair burden" the Georgia garnishment law places on companies, according to Daily Report Online. As written, the existing Georgia garnishment law holds employers liable for their defendant-employees if the company fails to respond to the garnishment order in a timely manner. As Levitas explains, companies "should never become liable for the underlying debts [of employees]. Imposing default judgments on garnishees [companies] adversely affects Georgia businesses -- through expenditure of time and money on non-core business matters -- without furthering the public's interest in getting debtors to satisfy their own obligations."

Mr. Levitas rightly points out that companies who fail to comply with garnishment orders can be subject to court motions to compel compliance rather than default judgments that place unfair, heavy financial burdens on companies. He asks that the Georgia legislature change the law to discontinue "the egregious practice" of holding companies liable for the personal financial obligations of employees.

Additionally, Levitas notes that "Georgia's service-of-process laws compound the problem companies face." Under Georgia law, service may be made to a company by delivering papers to "a person employed by a corporation," which could include a low-level manager working offsite. It could even include the employee-debtor who has zero incentive to forward the papers on to headquarters for processing.

Win-Win

Levitas calls for SB 255 not only to remove the possibility of default judgments against companies who fail to respond to garnishment orders in a timely manner, but also for "limiting service of process to an officer or registered agent" of a company. Levitas's notice proposal is a win-win, since it would better ensure that actual notice to companies occurs and thus allow the garnishment process to move faster and more efficiently against the employee having the financial obligation.

It appears that Georgia's garnishment law will remain clouded by unconstitutionality for the near future. As lobbying continues on SB 255, it's possible that corporate liability and corporate notice requirements may change for the better. What's most clear is that the current Georgia garnishment law is broken; what's less clear is how Georgia intends to fix it.

Tags: wage garnishments