What Happens if a Company Does Not Comply with a Wage Garnishment Order in California?

One effective way to collect a judgment against an individual is to garnish the debtor’s wages by obtaining an earnings withholding order (EWO) and serving it on the debtor’s employer. But what happens if the employer fails or refuses to turn over the required wages? In California, an earnings withholding order carries the same force as a court order. If the employer fails to complete the memorandum of garnishee and withdraw the required wages from the debtor’s paycheck, the creditor should immediately send a demand letter to the employer. If the employer still refuses to comply, the creditor can file an action against the employer for contempt. Often, the threat of fine or jail will be sufficient to cause the employer to comply. If the court finds the employer to be in contempt, the creditor can likely recover its associated attorneys’ fees from the employer.

In Orange County, debt collection via wage garnishment can be difficult because many debtors are employed by small businesses. Large corporations have been served with many earnings withholding orders, and they know how to process them. But small companies may be unfamiliar with the wage garnishment process, and/or may seek to help the debtor who the business values as an important employee. Before conducting a wage garnishment to collect debt in Orange County or anywhere in California, it is wise to understand the type of employer and to learn whatever possible about the debtor’s wages.

After the EWO is served, the creditor can determine the amount of wages garnished by reviewing the memorandum of garnishee completed and returned by the employer. If the creditor knows the approximate earnings of the debtor, reviewing the memorandum can allow the creditor to determine whether the employer has complied and garnished the required wages. If the employer is friendly with the debtor, it may try to skirt the order by postponing or advancing the debtor’s wages – which is illegal.  California Code of Civil Procedure § 706 permits judgment creditors to hold employers directly liable if the employer fails to withhold wages as required by a EWO. Specifically, under §706.029, service of an earnings withholding order creates a lien upon the earnings of the judgment debtor that are required to be withheld pursuant to the order and upon all property of the employer subject to the enforcement of a money judgment in the amount required to be withheld pursuant to such order.  The lien continues for a period of one year from the date the earnings of the judgment debtor becomes payable unless the amount required to be withheld pursuant to the order is paid as required by law.  The lien covers all property of the employer subject to the enforcement of a money judgment.

If the employer’s noncompliance with the order goes beyond mere funny business and enters into the zone of malicious and wanton misconduct, then it may be possible to seek punitive damages against the employer.

The Wallin Firm is quite experienced in this area and has assisted many businesses in Orange County with their debt collection issues, including wage garnishment, as well as throughout California.