Legalities of dealing with garnishments

Failure to properly and swiftly deal with a garnishment order could result in legal liability, including lawsuit from creditors or claims to unpaid wages
By Cédric Lamarche
|Canadian Payroll Reporter|Last Updated: 09/01/2011

Debt collection is an ugly business. Creditors often face debtors who have no seizable assets, are in financial distress, or have perfected the art of avoidance.  For this reason, creditors frequently turn to the most powerful collection weapon in their arsenal: the garnishment order.

Garnishment is a legal process by which an employer is directed to intercept a portion of an individual’s wages and remit it to a third party who is owed money.  Responding to a garnishment order can be complicated.  Not only do the applicable rules vary by province and territory, but the rights of at least three different persons must be accounted for:  the employee, the creditor, and the employer.

Failure to properly and swiftly deal with a garnishment order could expose an employer to significant legal liability including, among other things, being held exclusively accountable for reimbursement of the entire debt, being named in a lawsuit by creditors who have priority over other creditors, or claims due to unpaid wages.  To minimize their legal risk, employers served with garnishment orders are encouraged to follow a three step process.