The state of Oregon is one of the most popular living destinations in America. It offers affordable housing, great schools and wide-open forest land. No matter how wonderful, however, moving to another state does not leave your debt behind. Any debt you have accumulated, moves with you.
Of course, if you’re already a resident of Oregon, moving is not an issue. For tens of thousands of Oregon residents, new and old, America’s troubled economy over the last decade has resulted in excessive debt. For many, that excessive debt has tipped the scales into default – on child support, spousal maintenance, student loans, taxes, and retail consumer borrowings, both credit card and otherwise.
As a result, one or more of your creditors may have exhausted the collection process and sued you in court for money due, including a wage garnishment order, or obtained an administrative wage garnishment against you without the need of first filing a lawsuit.
If you are involved in the garnishment process – whether as creditor-garnishor, employer-garnishee, or debtor – what does the process look like?
And if it is your wages that are being garnished, what steps can you take to protect your rights and your money under federal and Oregon state law?
Garnishment of Wages in Oregon
A garnishment of wages is simply the involuntary taking of a portion of the employee’s paycheck.
From the employer’s perspective, the employer withdraws the garnished amount and sends it directly to the creditor, then pays the employee the remaining portion of his pay check.
From the employee’s viewpoint, you receive a pay check that amounts to a fraction of what you earned. Of course, this process imposes an administrative burden on the employer, and a financial burden on the employee and his family, factors which we will discuss below.
The Garnishment Process in Oregon for Garnishments Not Involving Child or Spousal Support
In most cases, the creditor starts with the collection process. Letters are sent and calls are made demanding payment of past due monies. If this fails, the creditor files a lawsuit in Oregon state court seeking a judgment for the money due plus interest and sometimes penalties. Once the creditor obtains a judgment, assuming it does, it typically proceeds to ask the court for a writ of garnishment.
Garnishments are routinely granted. With garnishment writ in hand, the creditor delivers the garnishment writ into the hands of your employer. The employer is then obligated to respond to the writ as the law requires within seven calendar days (in other words, weekends are counted unless the 7th day falls on a weekend or holiday, in which case the response date moves to the following day).
Since the time-frame involved is only a week, time is of the essence for all parties involved.
Duty of Oregon Employers to Respect Garnishment Orders
An employer might be of the mind that dealing with the garnishment order is too much trouble, or may even disagree with basis for it, for whatever reason. So the question arises: can the employer just ignore the order and pay the employee under the table if it so desires?
The predictable answer is: absolutely not. Unless the order is successfully challenged by the employee-debtor, or is in some way legally defective, the employer must commence the garnishment process in an orderly fashion. The garnishment does not go on forever, of course. In Oregon, the employer must withhold the debtor’s wages for each pay check coming down over the next 90 days, or until the debt is paid off in full, whichever comes first.
Failing to do what is required – e.g. not garnishing at all or not garnishing enough – will get the employer in hot water. In Oregon, the employer could be required to cover the amount of the lawful garnishment itself, plus costs borne by the creditor to get things right.
Ceiling on Amount of Wages Subject to Garnishment in Oregon
Adopting the minimum protections of federal law, the state of Oregon puts a ceiling on the total amount of wages that can be garnished from an employee’s pay check at any one time. The ceiling set is 25% of the employee’s take-home pay, and no matter what, the employee must take home at least $218 per week. This is the same rule embraced most other states. If priority garnishments like child support are involved, or if the employee is only part-time, that may mean that the ordinary creditor gets nothing for his garnishment order.
Wages and Income of Oregon Debtors Exempt from Garnishment
In Oregon, as in most states, certain wages and income are exempt from garnishment, meaning simply that they cannot be touched by garnishment.
Here are a few examples of exempt wages and income in Oregon:
- The previous two months wages or their equivalent;
- Benefits received from the federal government for such things as Social Security, Vets pay, railroad retirement, and the U.S. Personnel Office;
- A variety of public and private retirement plans;
- Income or medical assistance from the state of Oregon;
- Unemployment insurance payable by the state of Oregon;
- Black lung payments; and
- Worker’s Compensation award monies.
Instructions Provided to Oregon Employer-Garnishee
In general an Oregon employer has three steps it must follow when addressing a garnishment order. These are as follows:
Garnishee-employers must fill out Parts I and II of the Garnishee Response form, including calculation of the amount due per applicable law and guidelines. Non-employer garnishees such as banks only fill out Part I. Note that employers cannot properly pay money over to the creditor-garnishor if you are aware of the employee-debtor having filed for bankruptcy, and you must check the appropriate box so indicating.
If you have received two or more garnishment orders – e.g. child support and student loan – you must so indicate on your Response form. You will be required to pay and calculate the garnishment amount due in respect to the correct priority. Keep in mind that you do not withhold for the next pay check if the garnishment order is received within two business days of the debtor’s normal pay period.
Step 2 – Delivery of Employer-Garnishee Response
In addition to withholding the amount to be garnished, you must deliver the original Response to the Court that issued the writ of garnishment, a copy to the creditor-garnishor, and a copy to the debtor-employee.
Step 3 – Delivery of Funds or Property
Finally, unless ordered otherwise by the court, or unless the order is determined to be illegal in some way, the employer must deliver the garnished wages or property over to the creditor (or its attorney). There are also technical exceptions to this rule that are set forth in the writ and/or to which qualified professionals might be privy.
There are, as might be imagined, a host of limits and exceptions to when delivery would be inappropriate. Here are a few: the debtor has objected to the garnishment with the court that issued the writ; a previous garnishment has priority, such as child support; you have a lawful offset in certain situations where the debtor has a lien to your property; and the debtor-employee files for bankruptcy protection.
Dealing with Multiple Garnishment Claims in Oregon
Frequently an employer will be served with multiple garnishment orders for the same employee. Oregon follows the so-called “first-in-time, first-in-right" rule. The means the first garnishment received by the employer gets paid first, except where priority garnishment like child support or taxes is involved. In that case, regardless of when it is received, the priority garnishment takes precedence.
Right of Oregon Employers to Charge for Garnishment Compliance
Like many states, the state of Oregon allows the employer to charge a small administrative processing fee for complying with the garnishment order. $2 per week is the current amount in Oregon.
Firing Garnished Employees Runs Afoul of the Law in Oregon
Employers cannot fire an employee simply because he or she has had wages garnished. That is a violation of specific provisions of Oregon law.
Assistance Available to Oregon Employers for Garnishments
No doubt about it. Garnishment can be a tricky and complicated business for the employer. Qualified payroll services, human resources personnel, CPAs, accountants and attorneys should be consulted when in doubt. If child or spousal support is involved, the Child Support Division at the Oregon Department of Justice can help answer your questions or give you guidance.
In the final analysis, whether you are employer or employee, engaging qualified professionals to assist you is always a wise move.
Creditor: ORS 18.775
Exempt: ORS 18.600, 18.358, 18.784, 414.25
Garnishment: ORS 18.735
Multiple Garnishments: ORS 18.627
Pay Periods: OR 18.385
Priority: ORS 25.414
Processing Fee: ORS 18.736
Termination of Employment: ORS 18.385(9), ORS 25.424(6)(a)
Public Law 99-150, enacted on November 13, 1985, amending the Fair Labor Standards Act
Title II of the Consumer Credit Protection Act, 15 U.S.C. Section 1671 to 1777) – applies to all garnishment orders
Oregon Official Garnishment Website: https://www.oregon.gov/boli/TA/pages/t_faq_garnishments.aspx
Human Resources: http://www.blr.com/HR-Employment/Compensation/Garnishment-in-Oregon#
Garnishee Info: http://www.oregonlaws.org/ors/18.838