Posted on 11/09/2015 at 07:07 AM by Russell Samson
On November 1, 2015, an episode of The Good Wife entitled Payback (Season 7, Ep. 5) aired. Among the various themes in the show was a new client, a graduate of a for-profit college, who was receiving harassing telephone calls from a debt collection agency for unpaid student loan debt. This despite the fact the young lady swears she paid the debt. One of the twists in the plot to quote from Entertainment Weekly's summary -- Poor Maggie has found her way into the hands of a scam artist by believing a voicemail and then sending her check to the wrong address. In other words, she paid her $8,000, but she paid it to the wrong person, meaning she still owes APY Collections $8,000. So on Monday, November 2, 2015, a client calls.
It received two separate letters in the regular mail. The top document in each was a document on what appears to be the letterhead of the United States Department of Education. The document is entitled LETTER TO EMPLOYER & IMPORTANT NOTICE TO EMPLOYER. The letter recites that an individual who is believed to be one of the employer's employees has been identified as owing a delinquent nontax debt to the United States. It continues that federal law permits a federal agency, without first obtaining a court order, to garnish the pay of individuals. So, recites the letter, you as the employer are ordered to withhold a portion of the employee's pay and send the government the money. The letters the client received instructed the withheld money be sent to a Post Office Box in Georgia, or alternatively to have it electronically transferred to an identified by number bank account. The whole thing appears a bit fishy. Garnish without a court being involved? Welcome to the Debt Collection Improvement Act of 1996. An interested reader can get a blank set of the general paperwork under this federal law a packet called Standard Form 329 -- here. The materials received by the client were patterned exactly after these available / able to be filled in on the internet documents. But if this were a scam, wouldn't one expect a scammer to use official government forms? The materials received by the client did have the employee's Social Security Number.
But quite frankly, I would expect a scammer seeking to have an employer withhold money from an employee to have that information. Especially if the scammer knew the identity of the employer. And don't overlook the possibility that a genuine, from the federal government packet of materials may have some incorrect information. For example, the person named as the debtor / employee may not work for you and may never have worked for you. Or the name may be correct but the Social Security number doesn't correspond with what you have on record. Don't toss the materials in the trash! Under the Department of Education's regulations adopted under the Debt Collection Improvement Act of 1996 (DCIA), found at 34 CFR Part 34, once an employer receives a garnishment order issued by the agency, the employer must deduct from all disposable pay of the debtor during each pay period the amount directed in the garnishment order unless [regulations] require[ ] a smaller amount to be withheld. An employer which receives one of these administrative garnishment orders must continue to withhold from the debtor's wages for each pay period until the employer receives notification from the agency to discontinue the wage garnishment. Given the amounts in the documents our client received -- $19,997.12 and $15,549.76 the garnishments could go on for a long time. If at any point after the initial receipt of the administrative garnishment order, an employer fails to withhold and remit the money as required by the order, the employer shall be liable for any amount that the employer fails to withhold . . . plus attorneys' fees, costs, and, in the court's discretion, punitive damages. The employer must also pay to the Department all amounts the employer withholds according to the order. As noted earlier, the employer is encouraged to make the payment electronically, but can also mail a check to a given address. The employer must send the money within three business days of the actual withholding. In addition to the administrative garnishment order an employer receives a certification form SF392D (front and back) -- which must be completed and returned within the time stated in the instructions. In case you wondered, an employer may not discharge, refuse to employ, or take disciplinary action against a debtor due to the issuance of a garnishment order. 31 U.S. Code § 3720D(e).
In 1972, the United States Supreme Court in Morrissey v. Brewer, 408 U.S. 471 (1972) announced the standard, which I paraphrase: constitutional due process is that process which is due. The federal statute recites, and the Department of Education rules regarding student loans amplify, that there is some process that is to be given to the debtor / employee before the administrative garnishment is issued. And it is the debtor who is being deprived of money not the employer. So as an employer, there is little room for you to complain. (Other than not being compensated for your work in doing what the government mandates.) Errors are made. And scammers and fraudsters are extant. What might an employer do to at least be reasonably confident of the legitimacy of a packet of materials received in the mail directing that money be withheld from an employee's wages and sent off by mail to an out-of-state post office box or electronically to a bank account identified by number? At least for administrative wage garnishments from the Department of Education, an employer is given one route, maybe two routes, for checking not otherwise identified on the document received.
First there is a general web site where you are able to confirm the mailing address for payments. And perhaps of greater help, the web site has a phone number (not toll free). Have ready access to the materials you received you will need the Account Number and perhaps the Social Security number of the debtor, or the debtor's name, or you may be asked something else. Call 404-974-9490. Press 4, and then Press 3. And hope the operator is not busy on one test I made, I was told that the Operator was busy and that I was unable to leave a message because the Operator's mail box was full. And while the focus of this blog generally is on Iowa employers, if you're an Iowa employee and receive notice of proposed garnishment from a federal agency, find competent counsel quickly. Once the actual garnishment is issued, many windows appear to be closed.
The material in this blog is not intended, nor should it be construed or relied upon, as legal advice. Please consult with an attorney if specific legal information is needed.
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