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New Garnishment Law Offers Michigan Employers Significant Relief

New Garnishment Law Offers Michigan Employers Significant Relief

By: Dan Cohen – 5/26/15

A garnishment notice is never welcome news for an employer, but recent changes in Michigan’s garnishment statute will make them far less troubling. Garnishments are a no-win proposition for any employer, and if mishandled, can quickly turn into a costly nightmare. The biggest mistake an employer can make is failing to file a garnishment disclosure statement with the court within 14 days of receiving the garnishment papers.   Under current Michigan law, if an employer does not file a timely garnishment disclosure statement, the creditor can take a default judgment against the employer for the full amount of the employee debt, plus costs and attorney fees. The employer’s recourse is to file a motion to set aside the default judgment. Those of us who have been to court to set aside a default judgment recognize it is no easy task and employers face an uphill battle to convince a trial judge to excuse their neglect/delay.

MCLA 600.4012, which will apply to writs of garnishment issued after September 30, 2015, provides relief for employers who do not file the garnishment disclosure on time. The new procedure requires creditors to notify employers within 14 days after service of the garnishment papers by serving a “notice of failure” setting forth the required act or acts that the employer has failed to perform. Employers then have 28 days to “cure” the identified failure by mailing to the creditor and the defendant (the employee) a disclosure certifying that the employer will immediately begin withholding any available funds pursuant to the garnishment. If the employer fails to cure and a default is entered, the employer may still cure by mailing to the court, the creditor and the defendant employee a disclosure certifying that it will immediately begin withholding any available funds pursuant to the garnishment.

Even after three bites at the apple, if a default judgment is entered against the employer for the employee’s debt, the statute offers relief. Indeed, MCLA 600.4012(11) permits payroll deductions under MCLA 408.477 of up to 15% of the gross wages earned in the pay period in which the deduction was made until the full amount of the default judgment is paid off. Employers just have to make sure the deduction is explained at least one pay period before the wage payment affected by the deduction is made and the deduction does not reduce the employee’s pay below the minimum wage.

The new garnishment law contains other changes favorable to employers. For example, creditors must enclose a $35 processing fee with the notice of garnishment. The current law only requires a $6 check.   With the new law, garnishments will remain in effect until the balance of the judgment is satisfied. Currently, garnishments expire and employers must file multiple disclosures (perhaps risking default several times on a single debt). The new statute also requires creditors to provide the employer and employee with a statement of the remaining balance every six months while the garnishment is in effect as well as a release within 21 days after the balance of the judgment has been paid off. There are also specific reasons set forth in the statute for setting aside a default judgment.

The new garnishment statute eliminates much of the risk inherent in the existing procedure. Clearly, Michigan employers can claim a win on this one.

So Much To Do and So Little Time To Do It

So Much To Do and So Little Time To Do It

By: Dan Cohen – 5/19/15

Now that the dust has settled and we are living in a world of quickie elections before the National Labor Relations Board, it is never too early to start preparing for a sudden organizing drive. Some employers take their non-union status for granted and have no idea what it would mean to their business to operate as a union shop. Most employers, however, appreciate their non-union status and actually make it a point to treat their employees fairly, and with dignity and respect. These same employers keep their employees informed and involved, communicate directly with them and take pride in their employee relations. Of course, these employers won’t likely face a union organizing drive and, if they do, they are more likely to be successful. Even so, the quickie election rules reduce the time to campaign down to as little as 13 days depending on the region and the actual circumstances. This is only about a third as much time as employers had to get their message out before. Consequently, now is the time to plot and prepare.

Here are some of the things that employers should consider:

  1. Review and revise policies that have been under attack by the NLRB as overly broad, including work rules, social media and confidentiality policies. Overly broad polices have been found to violate Section 7 of the NLRA and can be used to set aside an election won by an employer;
  2. Consider adopting no solicitation, no distribution and off duty access policies, which can be effective in reducing organizing activities;
  3. Assess the strengths and weaknesses of supervisors and offer supervisory training on what is and isn’t lawful under current Board law, using the “TIPS” protocol (no threats, interrogations, promises or surveillance);
  4. Determine statutory supervisors under section 2(11) of the NLRA;
  5. Identify appropriate bargaining units based upon location of work, job classifications and duties;
  6. Develop and maintain employee lists with all the information that must be provided to the NLRB and the union since employers will have to provide this information immediately upon the direction of an election;
  7. Identify your most credible managers and most effective communicators to get your message across if a union organizing drive occurs;
  8. Open the communication channels between management and employees by considering open door policies, complaint procedures, alternative dispute resolution, small group meetings, social media and blogs;
  9. Involve employees and keep them informed through your various communication means;
  10. Inventory your wages and benefits and compare to your competition, both unionized and non-union;
  11. Conduct a vulnerability audit to see what issues must be addressed

Not all of these things are for every employer, and much depends on your size. The bigger you are, however, the more formalized your plan should be and the more resources you should be willing to devote to the process. Rome was not built in a day so get started now.

Now What?  Lansing Better Get to Work on Michigan’s Crumbling Roads

Now What? Lansing Better Get to Work on Michigan’s Crumbling Roads

By: Dan Cohen – 5/12/15

I have read quite a few editorials on the historic rejection of Proposal 15-1 by a 4 to 1 margin, but the title I like best is “Voters Crush Proposal 1 in Record Wipeout” by Gongwer News. The Monday-morning quarterbacks all agree on three things: (1) the proposal was doomed from the beginning due to its complexity and its gifts to special interest groups having nothing to do with fixing the roads; (2) citizens want a roads-only plan; and (3) citizens resent putting politicians in office, paying them only to have them punt.

In its press release, the state’s leading small business organization, the National Federation of Independent Business (NFIB), offered the following comments in regard to the failure of Proposal 15-1:

  •  “Voters have made it clear that they want a straight up proposal that addresses road funding and not unrelated issues such as school and local government funding, the earned income tax credit or other issues,” said NFIB State Director, Charlie Owens. “Small business owners understand the importance of roads and are supportive of efforts that build on prioritizing current spending before embarking on an overall tax increase for the entire funding need.”
  • Owens pointed out that back in early 2014 when there was a budget surplus, NFIB members preferred that the money be used for roads rather than an income tax cut. “When you consider that the income tax is the business tax for most small businesses it says a lot that they were willing to forgo a tax cut in favor of road funding,” said Owens. “Our small business members also supported the original House funding plan offered up last year.”
  •  “The outgoing 2014 legislature created an obligation on the new legislature (that took office in 2015) to hold off on any plan until the fate of Proposal 1 was decided,” said Owens. “That obligation is now lifted and lawmakers can start with a clean sheet of paper.”

It doesn’t take rocket scientist to understand that Michigan roads are about the worst in the nation because of neglect and underfunding.  According to former Michigan Treasurer, Robert Klein, “Michigan ranks dead last in spending per capita on roads and bridges.  It is no surprise our roads are in such bad shape.”

Enough said about the past.  I want to know what Lansing intends to do about our roads.  It is a simple question with a $1.2 Billion Dollar answer.  Governor Snyder has previously said he would raise the gas tax and increase vehicle registration fees to raise the money. Former House Speaker, Jase Bolger, would replace the sales tax on gas with a fuel tax.  This actually passed in the House but not in the Senate likely because the removal of the sales tax on gas would take millions from schools and local governments.  The Senate Plan called for a phased in gas tax increase of $.20 a gallon phased in over three years.  Others have suggested: (1) a simple sales tax increase of 1% which all goes toward fixing the roads; (2) using the interest from the $18 Billion Dollar Catastrophic Claims Fund; (3) a 10% across the board budget cut all of which would be earmarked for the roads; (4) toll-roads; (5) vehicle charges based upon weight of the vehicle and miles driven; and (6) reducing Michigan’s highest-in-the-nation gross truck weight.

If it were me, I would trim some of the fat in Michigan government first and see how much that saves before diving into sales tax increases, fuel taxes, registration fee increases and the like.  We don’t need the Michigan Civil Rights Department or MIOSHA.  The feds offer up the EEOC and OSHA, which would be sufficient in Michigan like they are elsewhere.  We probably could get away with a part-time legislature like Indiana.  Once the fat is trimmed away, I would start looking at the options in earnest.  Personally, however, I think we overpay for gas in this State already and would hate to see us pay even more.  This might help gas station owners in Toledo more than it helps our roads.