are wage assignments legal in wisconsin

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What Is Wage Assignment?

Definition and example of wage assignment, how wage assignment works, wage assignment vs. wage garnishment.

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A wage assignment is when creditors can take money directly from an employee’s paycheck to repay a debt.

Key Takeaways

• A wage assignment happens when money is taken from your paycheck by a creditor to repay a debt.
• Unlike a wage garnishment, a wage assignment can take place without a court order, and you have the right to cancel it at any time.
• Creditors can only take a portion of your earnings. The laws in your state will dictate how much of your take-home pay your lender can take.

A wage assignment is a voluntary agreement to let a lender take a portion of your paycheck each month to repay a debt. This process allows lenders to take a portion of your wages without taking you to court first.

Borrowers may agree to allow a lender to use wage assignments, for example, when they take out payday loans . The wage assignment can begin without a court order, although the laws about how much they can take from your paycheck vary by state.

For example, in West Virginia, wage assignments are only valid for one year and must be renewed annually. Creditors can only deduct up to 25% of an employee’s take-home pay, and the remaining 75% is exempt, including for an employee’s final paycheck.

If you agree to a wage assignment, that means you voluntarily agree to have money taken out of your paycheck each month to repay a debt.

State laws govern how soon a wage assignment can take place and how much of your paycheck a lender can take. For example, in Illinois, you must be at least 40 days behind on your loan payments before your lender can start a wage assignment. Under Illinois law, your creditor can only take up to 15% of your paycheck. The wage assignment is valid for up to three years after you signed the agreement.

Your creditor typically will send a Notice of Intent to Assign Wages by certified mail to you and your employer. From there, the creditor will send a demand letter to your employer with the total amount that’s in default.

You have the right to stop a wage assignment at any time, and you aren’t required to provide a reason why. If you don’t want the deduction, you can send your employer and creditor a written notice that you want to stop the wage assignment. You will still owe the money, but your lender must use other methods to collect the funds.

Research the laws in your state to see what percentage of your income your lender can take and for how long the agreement is valid.

Wage assignment and wage garnishment are often used interchangeably, but they aren’t the same thing. The main difference between the two is that wage assignments are voluntary while wage garnishments are involuntary. Here are some key differences:

Once you agree to a wage assignment, your lender can automatically take money from your paycheck. No court order is required first, but since the wage assignment is voluntary, you have the right to cancel it at any point.

Wage garnishments are the results of court orders, no matter whether you agree to them or not. If you want to reverse a wage garnishment, you typically have to go through a legal process to reverse the court judgment.

You can also stop many wage garnishments by filing for bankruptcy. And creditors aren’t usually allowed to garnish income from Social Security, disability, child support , or alimony. Ultimately, the laws in your state will dictate how much of your income you’re able to keep under a wage garnishment.

Creditors can’t garnish all of the money in your paycheck. Federal law limits the amount that can be garnished to 25% of the debtor’s disposable income. State laws may further limit how much of your income lenders can seize.

Illinois Legal Aid Online. “ Understanding Wage Assignment .” Accessed Feb. 8, 2022.

West Virginia Division of Labor. “ Wage Assignments / Authorized Payroll Deductions .” Accessed Feb. 8, 2022.

U.S. Department of Labor. “ Fact Sheet #30: The Federal Wage Garnishment Law, Consumer Credit Protection Act's Title III (CCPA) .” Accessed Feb. 8, 2022.

Sacramento County Public Law Library. “ Exemptions from Enforcement of Judgments in California .” Accessed Feb. 8, 2022.

District Court of Maryland. “ Wage Garnishment .” Accessed Feb. 8, 2022.

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What Is a Wage Assignment?

How wage assignment works.

• Why Are Wage Assignments Voluntary?

Wage Garnishment

The bottom line.

• Credit & Debt
• Debt Management

Wage Assignment: What It Means, How It Works

Wage assignment is the act of taking money directly from an employee's paycheck in order to pay back a debt obligation. Such an automatic withholding plan may be used to pay back a variety of debt obligations, including back taxes, defaulted student loan debt, and both child and spousal support payments.

Key Takeaways

• A wage assignment takes funds directly from an employee's paycheck to pay back a debt.
• How wage assignments are regulated varies by state, with some states even allowing for voluntary child support agreements.
• A wage garnishment is an involuntary deduction and requires a court order.

Wage assignments are typically incurred for debts that have gone unpaid for a prolonged period of time. Employees may sometimes opt for a voluntary wage assignment to pay for things like union dues or to contribute to a retirement fund.

A wage assignment is processed as part of an employer's payroll procedure. The employee's paycheck is decreased by the amount of the assignment and noted on their pay stub.

A wage assignment is often a lender's last resort to receive repayment from a borrower who has previously failed to pay a debt obligation.

Wage assignments are a valuable tool for collecting unpaid debts, but unfortunately, they may be associated with abusive lending practices . If you're struggling with your debt, one of the best debt relief companies or credit counseling agencies may be able to help you get back on track before a wage assignment is incurred.

What Makes Wage Assignments Voluntary?

In a voluntary wage assignment, a worker essentially asks their employer to withhold a portion of their paycheck and send it to a creditor to pay off a debt. Loan agreements may sometimes include a voluntary wage assignment clause in their terms should the borrower default on their loan.

Payday lenders often include voluntary wage assignments into their loan agreements to better their chances of being repaid. Laws regarding wage assignments vary by state.

For example, in West Virginia, wage assignments are capped at 25% of a worker's take-home earnings, the employee and the employer must sign the agreement, and agreements must be renewed annually. Under Illinois law, a lender cannot resort to wage assignment until a debt is 40 days in default. The wage assignment cannot continue for more than three years, and the worker can stop the wage assignment at any time.

Involuntary wage deductions, known as wage garnishments , require a court order and are most likely to be employed to collect spousal and child support payments that have been ordered by a court. Wage garnishments may also be used to collect unpaid court fines or student loans that have been defaulted on.

Several states allow individuals to sign up for voluntary child support agreements. In such a case, both parents must agree to a plan. Once that happens, a voluntary wage assignment may begin. If a child support or welfare agency is involved, they would have to approve any plan.

How Long Can I Have a Wage Assignment?

Since wage assignments are voluntary, the length of time that you use one can vary. Some loans include a wage assignment agreement, so you'll have to check the language of your loan to determine your obligation. Each state also has its own regulations regarding wage assignments.

How Much of My Income Can Go to Wage Assignments?

Every state has its own regulations, but typically 15–25% of your disposable income can be designated for wage assignments.

Is Wage Garnishment the Same as Wage Assignment?

While they are similar, wage garnishment and assignment are not the same. Wage garnishment is an involuntary paycheck deduction, typically ordered to repay child support, student loans, tax debt, or bankruptcy. A wage assignment is voluntary and may be used to repay a consumer debt.

Wage assignments may be a useful tool to help you pay down a debt. Wage assignments are voluntary but they may be hidden in the fine print of some loan products, so read everything carefully before signing. Check the regulations in your state to determine if your wage assignment is revocable.

West Virginia Division of Labor. " Wage Payment and Collection (WPC) Act: Payroll Deductions and Wage Assignments ," Page 3.

Illinois General Assembly. " (740 ILCS 170/) Illinois Wage Assignment Act ."

U.S. Department of Labor. " Fact Sheet #30: The Federal Wage Garnishment Law, Consumer Credit Protection Act's Title III (CCPA) ."

Illinois Legal Aid. " Understanding Wage Assignment ."

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Wage Assignment: Understanding Types and Real-life Scenarios

Last updated 04/16/2024 by

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Understanding wage assignment

How wage assignment operates, voluntary wage assignment, involuntary wage assignment, legal implications and considerations, regulations and protections, pros and cons of wage assignments.

• Facilitates debt repayment
• May prevent further legal actions
• Structured repayment process
• Reduction in take-home pay
• Potential negative impact on credit
• Legal constraints and limitations

Wage assignment in loan repayment

Wage assignment in child support cases, effects of wage assignment on credit, state-specific wage assignment regulations, florida wage assignment regulations, texas wage assignment limitations, frequently asked questions, is wage assignment the same as wage garnishment, can an employer refuse a wage assignment request from an employee, what legal protections exist for employees regarding wage assignments, can wage assignments be stopped or modified once initiated, do all types of debts qualify for wage assignment, key takeaways.

• Wage assignment involves deducting money from an employee’s paycheck to repay debts.
• It can be voluntary or involuntary, with distinct legal implications.
• State laws govern wage assignments, setting limits on garnishments and durations.
• Employees and employers should understand their rights and obligations regarding wage assignments.

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Facing Wage Garnishment in Wisconsin? Know Your Rights

Posted by Nathan DeLadurantey | May 15, 2024

Facing a wage garnishment can be stressful. Part of your hard-earned paycheck suddenly disappears, leaving you scrambling to make ends meet. If you live in Wisconsin, understanding the state's wage garnishment laws can empower you to navigate this situation.

What is Wage Garnishment?

Wage garnishment is a legal process that allows creditors (like credit card companies or debt collectors) to take a portion of your paycheck to satisfy a debt. A court order authorizes the garnishment, and your employer is legally obligated to withhold the specified amount from your wages and send it to the creditor.

Wisconsin Protections for Consumers

Wisconsin law offers some protections for consumers facing wage garnishment. Here's a breakdown of key points:

Limits on Amount Garnished: Generally, creditors can garnish the lesser of:

• 20% of your disposable earnings (your pay after mandatory deductions like taxes and Social Security)
• The amount your disposable earnings exceed 30 times the federal minimum wage

Exceptions: There are some exceptions where creditors can take a higher percentage, such as for child support, past-due taxes, or certain student loans.

Poverty Line Protection: If garnishment would reduce your household income below the poverty line, the amount garnished is limited to the amount exceeding the poverty line. You'll need to file a debtor's answer form to claim this exemption.

Garnishee Fees: The creditor must pay a $15 fee to your employer for each garnishment and each extension.

What to Do if You Face Garnishment

Review the Garnishment Order: Carefully examine the order to ensure its accuracy, including the amount and the creditor's information.

Contact the Creditor: If you believe there's an error, contact the creditor directly to discuss resolving the issue.

Explore Options: Consider debt consolidation or a payment plan with the creditor as alternatives to garnishment.

Seek Legal Help: An attorney specializing in consumer debt can advise you on your rights and explore potential legal challenges to the garnishment.

The Wisconsin Court System offers resources on wage garnishment, including instructions for filing a debtor's answer form to claim exemptions: https://www.wicourts.gov/formdisplay/SC-6070V_instructions.pdf?formNumber=SC-6070V&formType=Instructions&formatId=2&language=en

The Wisconsin Department of Revenue also provides information on wage attachments for unpaid taxes: https://www.revenue.wi.gov/Pages/OnlineServices/wage-wage.aspx

Remember: Knowledge is power. By understanding Wisconsin's wage garnishment laws, you can take informed steps to protect yourself and potentially minimize the impact on your finances.

Attorney Nathan DeLadurantey  offers free consultations to explain your legal rights in Wisconsin.  Free consultations can be scheduled online. 

About the Author

Nathan DeLadurantey

Nathan DeLadurantey ATTORNEY [email protected] Nathan is a skilled consumer lawyer who handles cases and trials all over Wisconsin. Phone consultations are always free and welcomed. Nathan has helped clients receive large jury verdicts and settlements stemming from consumer law violations, and is ready and able to assist.

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Wage Garnishment in Wisconsin

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A wage garnishment order allows creditors to take money directly from your paycheck. Most of the time, this is only possible after a court has entered a judgment. Here's how Wisconsin regulates wage garnishments.

Written by Upsolve Team .  Updated October 25, 2021

Wage garnishments can cause serious financial problems. When a creditor gets a court order to garnish your wages, they’ll take money directly from your paycheck. This reduces your take-home pay and can cause you to fall further behind with other debts. This article discusses who can garnish your wages in Wisconsin, how much of your paycheck can be withheld, and how you can stop a garnishment in the Badger State.

What Is Wage Garnishment?

A wage garnishment is an involuntary deduction from your paycheck. The money is used to pay past-due debts to your creditors. Most creditors must sue you and win a court judgment before they can garnish your paycheck. State law limits how much a creditor can garnish from your weekly wages, and some types of income are exempt from garnishment.

Who Can Garnish My Wages in Wisconsin?

Most garnishments in Wisconsin are done by consumer creditors. These are creditors for consumer debts such as credit cards, medical bills, personal loans, car loans, and more. Debt collectors and debt buyers also collect consumer debts. Consumer creditors have to win a lawsuit against you before they can garnish your wages.

There are other types of creditors that don’t have to win a lawsuit to garnish your wages. These include:

The IRS and the Wisconsin Department of Revenue for back taxes,

Creditors for domestic support payments, including child support and alimony, and

Collectors for federal student loans.

The amount these creditors can garnish from your paycheck varies. This article will focus on wage garnishments for collecting consumer debts that happen by court order.

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Wisconsin Wage Garnishment Process

First, the consumer creditor must sue you and serve you with a copy of the summons and complaint. A sheriff’s deputy or a private process server will usually serve these documents on you. You’ll need to reply. The timeline to reply to the summons will depend on which court you’re sued in. If it’s a Wisconsin circuit court, you have 20 days to file an answer. If you’re sued in small claims court, the summons you receive should show the date you need to appear in court to defend your case or the date by which you must file your answer with the court.

If you fail to file a timely answer or fail to appear at trial, the creditor will ask the court for a default judgment . This has the same effect as losing at trial — the court will award the creditor a judgment against you. 

Once the creditor has a judgment, they are called the judgment creditor, and you’re known as the judgment debtor. Most judgment creditors try to collect on their judgment with wage garnishment. They must get a court order for this, which is then served on your employer who’s called the garnishee. You’ll also get a copy. Your employer will withhold wages from your paycheck to pay the judgment creditor. 

Notice Requirements

Under Wisconsin law, when the creditor serves you with the garnishment notice, they’re also required to serve an exemption notice, a form for you to file an answer to the notice of garnishment, an exemption worksheet, and the poverty guidelines for Wisconsin. The notice of garnishment and other documents must be served on you within seven business days after the garnishee (your employer) has been served and at least three business days before the payday of the first affected pay period.

Objections and Exemptions

Just like you answered a lawsuit, you can answer the garnishment too. If you object to the garnishment amount or claim an exemption in your answer, the judgment creditor may file an objection and request a hearing. You may object to the garnishment if your income is below the poverty line and/or if you’ve received needs-based public assistance within the past six months. You’ll need to file a financial worksheet with the court to support this claim. If you forgot to put an exemption in your answer, you can file an amended answer. 

Renewing a Garnishment

Wage garnishments in Wisconsin expire after 13 weeks but can be renewed if you agree to the renewal. Why would anyone agree to be garnished? If you don’t agree, the judgment creditor has to start over with the garnishment proceedings. This is expensive, and the court allows the creditor to pass this cost on to you, so it’s usually best to agree with the extension. 

How Much of My Paycheck Can Be Taken by Wage Garnishment?

In Wisconsin, the total amount a creditor can garnish can’t be more than the amount of the judgment, which may include the original past-due debt plus any fees, costs, or interest. On a weekly basis, the judgment creditor can take the lesser of the following:

20% of your weekly disposable earnings, or  

Your weekly disposable income minus 30 times the federal minimum wage. The current minimum wage is $7.25/hour, and 30 times that is $217.50. 

If you make $217.50 a week or less, your wages can’t be garnished. Also, any Wisconsinite whose household income is below federal poverty guidelines can’t have their wages garnished. This is a special state exemption . Finally, if you’ve been on means-tested public assistance at any time during the past six months, creditors can’t garnish your wages. These are programs such as SNAP (formerly known as food stamps) and Supplemental Security Income (SSI) where proof of income is required for eligibility. Wisconsin doesn’t allow payday lenders to garnish wages.

In standard cases where none of these exemptions apply, here are a few examples of how the garnishment amount is calculated:

Wisconsin Wage Garnishment Calculations

In Example 1, where the employee has disposable earnings of $600 per week, the 20% rule is used since $120 (20% of $600) is less than $382.50 ($600 minus $217.50). In Example 2, the employee has disposable earnings of $245 per week. Here, the 30 times minimum wage rule is used. That’s because $27.50 ($245 - $217.50) is less than $49 (20% of $245). 

If the earner in Example 2 was the only income-earner in a one-person household, their wages would likely be exempt from garnishment under Wisconsin’s state poverty exemption because their annual income would be $12,740. If they didn’t qualify for this exemption, they’d have $27.50 of their weekly earnings garnished.

This formula is just for consumer debt. There are different rules for withholding child support and alimony orders as well as certain other kinds of debt like government debt.

How To Stop a Garnishment in Wisconsin

You can stop the garnishment by paying off the debt in a lump sum. But if you had enough money to pay off the debt, you probably would’ve paid the bill and not been sued in the first place. You can also let the earnings garnishment continue until the debt is paid in full. 

If you’re struggling with multiple debts, you might want to consider filing bankruptcy to get debt relief. As soon as you file bankruptcy, an automatic stay goes into effect. This stops all debt collection activities, including garnishments. Usually, the judgment and debt that was being collected by the garnishment will also be eliminated in bankruptcy. Most people lose nothing but their debt due to the bankruptcy exemptions on many types of property.

If you have a simple Chapter 7 bankruptcy , Upsolve has a free tool that can help you file your bankruptcy without using an attorney. For more complicated Chapter 7 bankruptcies and Chapter 13 bankruptcies , Upsolve can help you find an experienced attorney in your area.

Are There Any Resources for People Facing Wage Garnishment in Wisconsin?

Legal aid organizations such as Legal Action of Wisconsin provide free legal assistance for lower-income Wisconsinites. These organizations help with civil (non-criminal) legal matters such as evictions, family law, garnishments, and bankruptcies. You can also visit:

The Wisconsin State Law Library , which provides an extensive list of free legal resources for Wisconsinites.

Wisconsin Free Legal Answers , which allows you to ask legal questions to attorneys for free.

The Legal Aid Society of Wisconsin , which can help with filing bankruptcy to stop wage garnishment.

The American Bar Association, which provides information on free legal help .

Related Reading

• How To Get Free Credit Counseling in Wisconsin
• Repossession Laws in Wisconsin
• How To Answer a Wisconsin Debt Collection Court Summons
• Your Guide to Wisconsin’s Debt Collection Laws
• How To File Bankruptcy for Free in Wisconsin
• Eviction Laws and Tenant Rights in Wisconsin
• How to Consolidate Your Debts in Wisconsin
• How to Become Debt Free With a Debt Management Plan in Wisconsin
• How to Settle Your Debts in Wisconsin

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Wage Garnishment Laws in All 50 States

Updated Aug. 29, 2024

By: Jack Caporal

• Wage garnishment explained: Creditors can take a cut of a debtor's paycheck to collect on defaulted debt.
• Wage garnishment losses: 1% of workers are subject to wage garnishment with an average loss of 10% of their gross earnings.
• Garnishment prohibition: Four states don't allow wage garnishment for consumer debts.

As consumer debt continues to hit new records, concerns may be growing about wage garnishment -- the process in which creditors take a cut of a worker's paycheck to collect on defaulted debt.

Roughly 1 in 100 workers are subject to wage garnishment and they lose an average of 10% of their gross earnings to creditors, according to a 2023 study of payroll data from 2014 to 2019 by professors from Northwestern and MIT. They found that garnishments lasted from roughly five to eight months, depending on the type of debt.

Wage garnishment rules vary by state. Some have even prohibited garnishing wages for consumer debt. Read on for a rundown of wage garnishment rules in every state.

What is wage garnishment?

For those with unpaid consumer debt (like credit card debt or payday loans), wage garnishment is one costly possible outcome. If a creditor gets a judgment in its favor, federal law allows garnishment of up to 25% of the debtor's disposable earnings. This money is taken out of their paycheck by their employer and sent to the creditor. According to a 2013 ADP study, about 3% of employees have wages garnished because of consumer and student debt, and 7.2% had wages garnished overall.

That's a big chunk of your paycheck that could be taken away. States can also pass their own debt collection laws, and several have set stricter limits on how much creditors can take or have added protections

Federal wage garnishment law

Per federal law, 75% of your disposable earnings or 30 times the federal minimum wage, whichever is greater, is exempt from wage garnishment for ordinary garnishments, which includes consumer debt. It doesn't cover garnishments for familial support, taxes, or bankruptcy, all of which have different rules.

Let's say you have $500 of disposable earnings per week. The greater of the following two amounts would be exempt:

• 75% of $500, which is $375
• 30 times the federal minimum wage (currently $7.25 an hour), which is $217.50

Since $375 is the greater amount, that's how much of your earnings would be exempt, meaning $125 could be taken from your weekly pay. If, on the other hand, you earn $217.50 per week or less, then your wages can't be garnished at all.

Wage garnishment laws by state

Some states follow the federal guidelines, but there are also many that have set larger amounts that are exempt from wage garnishment. A few have even prohibited wage garnishment for consumer debt entirely.

Follows federal wage garnishment guidelines: The lesser of either 25% of disposable income or the amount of disposable income exceeding 30 times the federal minimum wage per week.

$473 per week , $743 per week if the debtor's earnings alone support their household, or the first 75% of disposable earnings, whichever is greater, is exempt from wage garnishment.

The lesser of 10% of disposable earnings, lowered to 5% if a judge determines extreme economic hardship has been shown, or disposable income remaining after deducting 60 times the highest applicable federal, state, or local minimum wage.

Follows federal wage garnishment guidelines unless the debtor is a laborer or mechanic, in which case 60 days of wages are exempt , and after that, the first $25 earned per week is also exempt from wage garnishment.

The lesser of 20% of disposable earnings or disposable income remaining after deducting 40 times the state's minimum wage .

The lesser of 20% of disposable income or disposable income remaining after deducting 40 times the federal or state minimum wage .

Connecticut

The lesser of 25% of disposable earnings or disposable income remaining after deducting 40 times the federal or state minimum wage .

The lesser of 15% of disposable income or disposable income remaining after deducting 30 times the federal minimum wage .

District of Columbia

The lesser of 25% of disposable income or disposable income remaining after deducting 40 times the district's minimum wage . Additional wages can be exempt from garnishment if a judge determines that undue hardship has been shown.

Debtors are exempt if they are a head of family (provides more than one-half of the support for a child or other person) and makes $750 or less per week , in which case all earnings are exempt from wage garnishment.

Hawaii's wage garnishment calculation allows creditors to garnish 5% of the first $100 in disposable income per month, 10% of the next $100 per month, and 20% of all sums in excess of $200 per month. If this amount is greater than the amount that would be garnished under the federal guidelines, then the federal guidelines must be used.

The lesser of 15% of disposable earnings or disposable income remaining after deducting 45 times the state's minimum wage.

If the debtor can prove with good cause that the amount should be reduced, in which case it can be set to under 25% , but no less than 10%, of the debtor's disposable income.

The maximum amount that can be garnished per year is based on the debtor's income as follows:

• Below $12,000: Up to $250
• $12,000 to $15,999: Up to $400
• $16,000 to $23,999: Up to $800
• $24,000 to $34,999: Up to $1,500
• $35,000 to $49,999: Up to $2,000 may be garnished
• $50,000 and above: No more than 10% of wages may be garnished

The lesser of 25% of disposable earnings or the amount of disposable income exceeding 40 times the federal or state minimum wage .

Massachusetts

The lesser of 15% of disposable earnings or the amount of disposable income exceeding 50 times the federal or state minimum wage.

The lesser of 25% of disposable earnings or the amount of disposable income exceeding 40 times the federal minimum wage .

Mississippi

The first 30 days of wages after the garnishment order is served are exempt from wage garnishment. After that Mississippi follows federal wage garnishment guidelines: The lesser of either 25% of disposable income or the amount of disposable income exceeding 30 times the federal minimum wage per week.

If the debtor is the head of the household, the lesser of 10% of disposable income or the amount of disposable income exceeding or 30 times the federal minimum wage, is subject to garnishment.

If the debtor is the head of the household, the lesser of 15% of disposable income or the amount of disposable income exceeding 30 times the federal minimum wage, is subject to garnishment.

The lesser of the the following amounts is subject to wage garnishment :

• 18% of disposable earnings if the debtor's gross weekly wages are $770 or less
• 25% of disposable earnings if the debtor's gross weekly wages exceed $770
• Disposable income exceeding 50 times the federal minimum wage

New Hampshire

The lesser of 25% of disposable earnings or the amount of disposable income exceeding 50 times the federal minimum wage . New Hampshire doesn't allow for continuous garnishment, so a creditor must file in court for each new paycheck it wants to garnish.

In New Jersey, 10% of disposable income is subject to wage garnishment if the debtor's earnings are less than 250% of the federal poverty level. 75% of income is exempt from wage garnishment if the debtor's earnings are more than 250% of the federal poverty level.

The lesser of 25% of disposable earnings or the amount of disposable income remaining after 40 times the federal minimum wage is subject to wage garnishment.

The lesser of the following amounts is subject to wage garnishment :

• 10% of the debtor's gross earnings
• 25% of the debtor's disposable earnings
• Disposable income exceeding 30 times the federal minimum wage

Wages can not be garnished if disposable income is less than 30 times the federal minimum wage.

North Carolina

Wage garnishment for consumer debt is not permitted.

North Dakota

The lesser of 25% of disposable earnings or the amount of disposable income remaining after 40 times the federal minimum wage is subject to wage garnishment .

An additional $20 per week is exempt for each dependent family member who resides with the debtor.

Debtors that show undue hardship and support one or more dependents may receive a larger exemption.

In Oregon, 25% of disposable earnings, however a debtor's disposable income after garnishment cannot be less than the following amounts based on the debtor's pay frequency:

• $254 per week
• $509 per any two-week period
• $545 for any half-month period
• $1,090 for any one-month period

Pennsylvania

Wage garnishment for most consumer debt is not permitted.

Rhode Island

South carolina, south dakota.

The lesser of 20% of disposable earnings or the amount of disposable earnings exceeding 40 times the federal minimum wage. An additional $25 per week is exempt for each dependent family member who lives with the debtor.

Follows federal wage garnishment guidelines: The lesser of either 25% of disposable income or the amount of disposable income exceeding 30 times the federal minimum wage per week. Adds an exemption of $2.50 per week for each of the debtor's dependent children under the age of 16 who live in the state.

The lesser of 20% of disposable earnings or the amount of disposable earnings exceeding 40 times the federal minimum wage.

The lesser of 25% of disposable earnings or the amount of disposable earnings exceeding 40 times the federal minimum wage .

The lesser of 20% of disposable earnings or disposable earnings exceeding 35 times the federal minimum wage.

West Virginia

The lesser of 20% of disposable earnings or disposable income exceeding 50 times the federal minimum wage.

The lesser of 20% of disposable earnings or 30 times the federal minimum wage, whichever is greater, is exempt from wage garnishment.

How to protect yourself from wage garnishment

If your wages are currently being garnished, a creditor has filed a lawsuit against you, or you're worried that could happen due to an unpaid debt, there are a few ways you can protect yourself.

• Check the laws and exemptions in your state: Some states allow you to exempt more income if you're the head of your household, if you support dependents, or if you prove that the normal exemption wouldn't leave you enough money to pay your bills. You typically need to apply for these types of larger exemptions, though. If you fail to do that, the court won't know that your circumstances qualify you to keep more of your wages. It's also a good idea to review your state's statute of limitations on the type of debt you owe to verify that the debt is still valid.
• Settle the debt with the creditor: Creditors are often willing to negotiate and either set up a payment plan or accept one lump-sum debt settlement payment. It's better to be proactive and work with the creditor before there's a wage garnishment order against you, but even if that has already happened, you could still have success with this method.
• Object to the garnishment: You can object to a garnishment if it's causing financial hardship. To learn how, contact the courthouse that issued the judgment. Be prepared to provide your current income and monthly expenses.
• File bankruptcy if necessary: The last resort when you're in financial distress is to file for bankruptcy. This is a big step, so it's important to understand how bankruptcies work first. A bankruptcy causes an automatic stay order, which will stop the wage garnishment against you until either your debts are discharged, you set up a payment plan (for a Chapter 13 bankruptcy), or your bankruptcy filing is dismissed.

Methodology

The federal wage garnishment laws and state wage garnishment laws listed are accurate as of April 23, 2024.

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Lyle Daly is a freelance writer who has been covering personal finance since 2016.

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Wisconsin Statutes 767.75 – Assignment of income for payment obligations

Ask a business law question, get an answer ASAP! Thousands of highly rated, verified business lawyers. Click here to chat with a lawyer about your rights.

Terms Used In Wisconsin Statutes 767.75

• Clerk of court : An officer appointed by the court to work with the chief judge in overseeing the court's administration, especially to assist in managing the flow of cases through the court and to maintain court records.
• Following : when used by way of reference to any statute section, means the section next following that in which the reference is made. See Wisconsin Statutes 990.01
• Garnishment : Generally, garnishment is a court proceeding in which a creditor asks a court to order a third party who owes money to the debtor or otherwise holds assets belonging to the debtor to turn over to the creditor any of the debtor
• Jurisdiction : (1) The legal authority of a court to hear and decide a case. Concurrent jurisdiction exists when two courts have simultaneous responsibility for the same case. (2) The geographic area over which the court has authority to decide cases.
• Obligation : An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
• Person : includes all partnerships, associations and bodies politic or corporate. See Wisconsin Statutes 990.01
• Restitution : The court-ordered payment of money by the defendant to the victim for damages caused by the criminal action.
• State : when applied to states of the United States, includes the District of Columbia, the commonwealth of Puerto Rico and the several territories organized by Congress. See Wisconsin Statutes 990.01
• Week : means 7 consecutive days. See Wisconsin Statutes 990.01

Understanding Wisconsin Employment and Labor Laws

Michał Kowalewski

September 04, 2024

Last Update

Table of Contents

Federal vs. state law differences, employment vs. labor law: what’s the difference, wages and hours in wisconsin, leaves of absence in wisconsin, workplace safety in wisconsin, discrimination and harassment laws in wisconsin, unions in wisconsin, stay compliant across the us with deel peo, key takeaways.

• Wisconsin’s minimum wage follows the federal minimum, with ongoing discussions about potential increases to reflect the cost of living.
• Wisconsin provides robust protections against workplace discrimination and harassment, ensuring a fair working environment for all employees.
• Employers and employees must be aware of Wisconsin's specific requirements for overtime pay, employee classification, and workplace safety to ensure compliance.

In the US, labor and employment laws establish the framework for fair and equitable workplaces. They outline the rights and responsibilities of employers, employees, and labor unions, covering areas such as wages, working conditions, health and safety, and termination. Since these laws can vary by state, it's crucial for both employers and employees to know their local requirements. In this article, we’ll cover the key laws in Wisconsin.

While federal laws provide a baseline across the United States, Wisconsin has its own set of labor regulations that complement federal laws. Wisconsin's employment laws ensure additional protections, particularly regarding workplace safety and anti-discrimination measures. It is important for both employers and employees to understand how state-specific regulations may differ from federal laws to maintain compliance.

Employment laws typically cover the rights and responsibilities of individual employees, including wage standards, discrimination protections, and leave policies. Labor laws, on the other hand, focus on the relationship between employers and collective entities like unions, covering collective bargaining, workers' rights to organize, and union management.

Wisconsin’s wage and hour laws incorporate both state-specific requirements and federal guidelines to ensure fair compensation for workers.

Minimum wage in Wisconsin

As of now, Wisconsin follows the federal minimum wage rate, which is $7.25 per hour. While there have been discussions about increasing the state minimum wage to better reflect the cost of living, no changes have been implemented yet.

Overtime pay in Wisconsin

Under Wisconsin state law, non-exempt employees must be paid overtime at a rate of one and a half times their regular pay for hours worked over 40 in a workweek. This rule is designed to ensure that employees receive fair compensation for working additional hours.

Pay transparency in Wisconsin

Wisconsin does not have specific state laws regarding pay transparency . However, employers are encouraged to implement fair pay practices and ensure that wage discussions among employees are not prohibited, fostering an environment of trust and equity.

Breaks and rest periods in Wisconsin

Wisconsin law requires employers to provide reasonable breaks for employees under 18 years of age, specifically a 30-minute meal period for every 6 hours worked. While there are no specific state laws mandating breaks for adult employees, employers commonly provide breaks to promote workplace health and productivity.

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Wisconsin has its own Family and Medical Leave Act (WFMLA), which allows eligible employees to take unpaid leave for family or medical reasons. This state law runs concurrently with the federal Family and Medical Leave Act (FMLA), providing additional protections to employees.

Pregnancy disability leave

Under the Wisconsin Family and Medical Leave Act, employers must provide leave for pregnancy-related conditions, ensuring that expecting and new mothers have job protection during critical periods.

Paid sick leave

Wisconsin does not have a statewide mandate for paid sick leave. However, employers may offer paid sick leave as part of their employee benefits package, and some local ordinances may have specific requirements.

Jury duty in Wisconsin

Employers in Wisconsin must allow employees to take time off for jury duty. While the state does not require employers to pay employees for this time, it does protect employees from termination or any form of retaliation due to jury service.

Wisconsin adheres to both federal OSHA standards and state-specific regulations under the Wisconsin Department of Safety and Professional Services (DSPS). These regulations ensure that employers maintain safe workplaces, provide necessary training, and comply with safety reporting requirements.

Wisconsin has strong anti-discrimination laws enforced under the Wisconsin Fair Employment Law, which prohibits discrimination based on race, color, sex, national origin, disability, age, religion, sexual orientation, and more. Employers must implement policies to prevent and address discrimination and harassment in the workplace.

Wisconsin is a "right-to-work" state, which means employees cannot be required to join a union or pay union dues as a condition of employment. However, employees still retain the right to organize and engage in collective bargaining if they choose.

What is the minimum wage in Wisconsin?

Currently, the minimum wage in Wisconsin is $7.25 per hour, which aligns with the federal minimum wage. There have been discussions about increasing this rate, but no changes have been made.

Are employers required to provide paid family leave?

Wisconsin law, through the Wisconsin Family and Medical Leave Act (WFMLA), provides eligible employees with unpaid leave for family or medical reasons, offering similar protections as the federal FMLA.

What protections exist against workplace discrimination in Wisconsin?

Wisconsin law prohibits discrimination based on various protected characteristics, including race, gender, disability, and more. Employers are required to have policies that prevent and address workplace discrimination and harassment.

How do employees file a workplace complaint in Wisconsin?

Employees can file complaints regarding labor law violations with the Wisconsin Department of Workforce Development (DWD) or the Equal Employment Opportunity Commission (EEOC), depending on the issue.

Are there specific requirements for meal and rest breaks?

While Wisconsin mandates meal breaks for minors, there are no specific state laws requiring meal or rest breaks for adults. Employers are encouraged to provide breaks to promote employee well-being.

Keeping up to date with the latest state-specific labor and employment laws is a crucial but resource-intensive task for HR and payroll teams. With Deel PEO , you can offload HR and compliance risks and focus on growing your business. Deel’s services include:

• Expert payroll administration
• Advanced HR and benefits compliance
• Access to benefit plans from leading providers
• Trainings, HR policies, and on-demand HR support

Book a demo to explore Deel’s platform and speak with an expert.

Disclaimer: This article is provided for general informational purposes and should not be treated as legal or tax advice. Consult a professional before proceeding.

About the author

Michał Kowalewski a writer and content manager with 7+ years of experience in digital marketing. He spent most of his professional career working in startups and tech industry. He's a big proponent of remote work considering it not just a professional preference but a lifestyle that enhances productivity and fosters a flexible work environment. He enjoys tackling topics of venture capital, equity, and startup finance.

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WAGE AND HOUR DIVISION

UNITED STATES DEPARTMENT OF LABOR

Fact Sheet #30: The Federal Wage Garnishment Law, Consumer Credit Protection Act's Title III (CCPA)

Revised October 2020

This fact sheet provides general information concerning the CCPA’s limits on the amount that employers may withhold from a person’s earnings in response to a garnishment order, and the CCPA’s protection from termination because of garnishment for any single debt.

Wage Garnishments

A wage garnishment is any legal or equitable procedure through which some portion of a person’s earnings is required to be withheld for the payment of a debt. Most garnishments are made by court order. Other types of legal or equitable procedures for garnishment include IRS or state tax collection agency levies for unpaid taxes and federal agency administrative garnishments for non-tax debts owed to the federal government.

Wage garnishments do not include voluntary wage assignments – that is, situations in which employees voluntarily agree that their employers may turn over some specified amount of their earnings to a creditor or creditors.

Title III of the CCPA’s Limitations on Wage Garnishments

Title III of the CCPA (Title III) limits the amount of an individual’s earnings that may be garnished and protects an employee from being fired if pay is garnished for only one debt. The U.S. Department of Labor’s Wage and Hour Division administers Title III, which applies in all 50 states, the District of Columbia, and all U.S. territories and possessions. Title III protects everyone who receives personal earnings.

The Wage and Hour Division has authority with regard to questions relating to the amount garnished or termination. Other questions relating to garnishment should be directed to the court or agency initiating the garnishment action. For example, questions regarding the priority given to certain garnishments over others are not matters covered by Title III and may be referred to the court or agency initiating the action. The CCPA contains no provisions controlling the priorities of garnishments, which are determined by state or other federal laws. However, in no event may the amount of any individual’s disposable earnings that may be garnished exceed the percentages specified in the CCPA.

Definition of Earnings

The CCPA defines earnings as compensation paid or payable for personal services , including wages, salaries, commissions, bonuses, and periodic payments from a pension or retirement program. Payments from an employment-based disability plan are also earnings.

Earnings may include payments received in lump sums , including:

• commissions;
• discretionary and nondiscretionary bonuses;
• productivity or performance bonuses;
• profit sharing;
• referral and sign-on bonuses;
• moving or relocation incentive payments;
• attendance, safety, and cash service awards;
• retroactive merit increases;
• payment for working during a holiday;
• workers’ compensation payments for wage replacement, whether paid periodically or in a lump sum;
• termination pay ( e.g. , payment of last wages, as well as any outstanding accrued benefits);
• severance pay; and,
• back and front pay payments from insurance settlements.

In determining whether certain lump-sum payments are earnings under the CCPA, the central inquiry is whether the employer paid the amount in question for the employee’s services .If the lump-sum payment is made in exchange for personal services rendered, then like payments received periodically, it will be subject to the CCPA’s garnishment limitations. Conversely, lump-sum payments that are unrelated to personal services rendered are not earnings under the CCPA.

For employees who receive tips, the cash wages paid directly by the employer and the amount of any tip credit claimed by the employer under federal or state law are earnings for the purposes of the wage garnishment law. Tips received in excess of the tip credit amount or in excess of the wages paid directly by the employer (if no tip credit is claimed or allowed) are not earnings for purposes of the CCPA.

Limitations on the Amount of Earnings that may be Garnished (General)

The amount of pay subject to garnishment is based on an employee’s “disposable earnings,” which is the amount of earnings left after legally required deductions are made . Examples of such deductions include federal, state, and local taxes, and the employee’s share of Social Security, Medicare and State Unemployment Insurance tax. It also includes withholdings for employee retirement systems required by law.

Deductions not required by law – such as those for voluntary wage assignments, union dues, health and life insurance, contributions to charitable causes, purchases of savings bonds, retirement plan contributions (except those required by law) and payments to employers for payroll advances or purchases of merchandise – usually may not be subtracted from gross earnings when calculating disposable earnings under the CCPA.

Title III sets the maximum amount that may be garnished in any workweek or pay period, regardless of the number of garnishment orders received by the employer. For ordinary garnishments ( i.e. , those not for support, bankruptcy, or any state or federal tax), the weekly amount may not exceed the lesser of two figures: 25% of the employee’s disposable earnings, or the amount by which an employee’s disposable earnings are greater than 30 times the federal minimum wage (currently $7.25 an hour).

Therefore, if the pay period is weekly and disposable earnings are $217.50 ($7.25 × 30) or less, there can be no garnishment. If disposable earnings are more than $217.50 but less than $290 ($7.25 × 40), the amount above $217.50 can be garnished. If disposable earnings are $290 or more, a maximum of 25% can be garnished. When pay periods cover more than one week, multiples of the weekly restrictions must be used to calculate the maximum amounts that may be garnished. The table and examples at the end of this fact sheet illustrate these amounts.

As discussed below, these limitations do not apply to certain bankruptcy court orders, or to garnishments to recover debts due for state or federal taxes, and different limitations apply to garnishments pursuant to court orders for child support or alimony.

Limitations on the Amount of Earnings That May be Garnished for Child Support and Alimony

Title III also limits the amount of earnings that may be garnished pursuant to court orders for child support or alimony. The garnishment law allows up to 50% of a worker’s disposable earnings to be garnished for these purposes if the worker is supporting another spouse or child, or up to 60% if the worker is not. An additional 5% may be garnished for support payments more than l2 weeks in arrears.

Exceptions to Title III’s Limitation on Wage Garnishments

The wage garnishment law specifies that its limitations on the amount of earnings that may be garnished do not apply to certain bankruptcy court orders, or to debts due for federal or state taxes.

If a state wage garnishment law differs from Title III, the law resulting in the lower amount of earnings being garnished must be observed.

Non-Tax Debts Owed to Federal Agencies

The Debt Collection Improvement Act authorizes federal agencies or collection agencies under contract with them to garnish up to 15% of disposable earnings to repay defaulted debts owed to the U.S. government. As of December 20, 2018, the Higher Education Act authorizes the Department of Education’s guaranty agencies to garnish up to 15% of disposable earnings to repay defaulted federal student loans. Such withholding is also subject to the provisions of Title III of the CCPA, but not state garnishment laws. Unless the total of all garnishments exceeds Title III’s limits on garnishment, questions regarding such garnishments should be referred to the agency initiating the withholding action.

EXAMPLES OF AMOUNTS SUBJECT TO GARNISHMENT

The following examples illustrate the statutory tests for determining the amounts subject to garnishment, based on the current federal minimum wage of $7.25 per hour.

• An employee’s gross earnings in a particular week are $263. After deductions required by law, the disposable earnings are $233.00. In this week, $15.50 may be garnished, because only the amount over $217.50 may be garnished where the disposable earnings are less than $290.
• An employee receives a bonus in a particular workweek of $402. After deductions required by law, the disposable earnings are $368. In this week, 25% of the disposable earnings may be garnished. ($368 × 25% = $92).
• An employee paid every other week has disposable earnings of $500 for the first week and $80 for the second week of the pay period, for a total of $580. In a biweekly pay period, when disposable earnings are at or above $580 for the pay period, 25% may be garnished; $145.00 (25% × $580) may be garnished. It does not matter that the disposable earnings in the second week are less than $217.50.
• An employee on a $400 weekly draw against commissions has disposable earnings each week of $300. Commissions are paid monthly and result in $1,800 in disposable earnings for July after already-paid weekly draws are subtracted and deductions required by law are made. Each draw and the monthly commission payment are separately subject to the law’s limitation. Thus, 25% of each week’s disposable earnings from the draw ($75 in this example) may be garnished. Additionally, 25% of the disposable earnings from the commission payment may be garnished, or $450 ($1,800 × 25% = $450).
• An employee who has disposable earnings of $370 a week has $140 withheld per week pursuant to court orders for child support. Title III allows up to 50% or 60% of disposable earnings to be garnished for this purpose. A garnishment order for the collection of a defaulted consumer debt is also served on the employer. If there were no garnishment orders (with priority) for child support, Title III’s general limitations would apply to the garnishment for the defaulted consumer debt, and a maximum of $92.50 (25% × $370) would be garnished per week. However, the existing garnishment for child support means in this example that no additional garnishment for the defaulted consumer debt may be made because the amount already garnished is more than the amount (25%) that may be generally garnished. Additional amounts could be garnished to collect child support, delinquent federal or state taxes, or certain bankruptcy court ordered payments.

Title III Protections against Discharge when Wages are Garnished

The CCPA prohibits an employer from firing an employee whose earnings are subject to garnishment for any one debt, regardless of the number of levies made or proceedings brought to collect that one debt. The CCPA does not prohibit discharge because an employee’s earnings are separately garnished for two or more debts.

Where to Obtain Additional Information

For additional information, visit our Wage and Hour Division Website: http://www.dol.gov/agencies/whd and/or call our toll-free information and helpline, available 8 a.m. to 5 p.m. in your time zone, 1-866-4USWAGE (1-866-487-9243).

This publication is for general information and is not to be considered in the same light as official statements of position contained in the regulations.

The contents of this document do not have the force and effect of law and are not meant to bind the public in any way. This document is intended only to provide clarity to the public regarding existing requirements under the law or agency policies.

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Wage Garnishment & Assignment: 4 must knows for employers

By Julie Farraj

Feb. 15, 2017

Proper management of wage garnishment can be especially crucial to growing businesses because as their hiring increases, they may also be inadvertently increasing their garnishment liability. That’s why it’s important for an employer to remember four things can help appropriately and accurately process wage garnishments while remaining compliant.

1. All garnishments are not the same.

Here’s a basic wage withholding definition: When an employee fails to repay a debt, a wage withholding court order can be issued against the employee’s earnings to satisfy that debt. This court order — also called a wage garnishment — requires the employer to withhold a portion of the employee’s wages and forward them to a third party. Wage garnishment orders also can be issued by government agencies such as the IRS, state tax agencies and the U.S. Department of Education.

Simple, right? A business receives an order about one of its employees and refers it to its payroll department to process by withholding the appropriate wages and forwarding it to the proper recipient.

There are six common types of wage garnishment. They are:

Child support garnishment comprises by far the highest volume of orders employers process, and, while some of the laws are very standardized, the law can vary by state.

Creditor garnishments are debts that occur when a person is delinquent on consumer payments (e.g. credit card debt). The creditor may take the debtor to court and seek a wage withholding order for the outstanding debt.

Bankruptcy orders . Based on research from the American Bankruptcy Institute , 97 percent of all bankruptcies are personal filings rather than business filings.

Student loans may be collected by the U.S. Department of Education, which may contract with collection agencies to enforce and collect the defaulted loans.

Tax levy garnishments can be issued at the federal, state or local level. Each state differs in its requirements and those laws may differ from federal levies.

Wage assignment occurs when an employee voluntarily agrees to have money withheld from his or her wages. Wage assignments are governed by state law and do not involve a court order. Since they are voluntary and the employee specifies the amount to withhold, they do not fall under the requirements of the Federal Consumer Credit Protection Act.

It’s important that employers keep in mind the type of debt owed, the party collecting it, and the laws applicable to that debt. Knowing which laws, rules, and regulations apply and keeping current on them when processing wage garnishments can be challenging for employers, and, if done incorrectly, may expose employers to various liabilities and penalties.

In addition, the six types of wage garnishments noted above are the most common wage garnishments; employers may receive other less common types of wage garnishments. It’s the employer’s responsibility to comply with and make sure all orders are processed in a timely manner and correctly whether or not they are familiar.

2. Wage garnishment can affect employee productivity and morale.

Most employers recognize that wage garnishment has a direct impact on employees. However, this impact can extend beyond their paychecks. Processing garnishments is not as straightforward as simply withholding wages from an employee’s paycheck and sending a payment. The process is far from simple and can be complicated by myriad emotions.

Employees often find it humiliating because the courts have intervened and employers have become involved in their private struggles.

Employees in this position may feel that they’re now working for the institutions to which they’re indebted rather than for themselves and their futures. Stress and anxiety are often natural extensions of the garnishment process.

An affected employee’s anxiety could show itself through decreased productivity or a lack of motivation. Employers can help affected employees and potentially decrease future garnishments by providing financial wellness training and counseling, as well as tax education, to help employees manage debt.

3. Wage garnishment can affect an employer’s finances and business efficiency.

Employees aren’t the only ones affected by wage garnishment. Employers expose themselves to financial and legal risk when they incorrectly garnish an employee’s wages, fail to file in a timely way, file a defective response, fail to follow specific requirements when sending payments, or make other missteps with a garnishment. Mishandling a garnishment can lead to a judgment against the employer for the entire amount of the employee’s debt, a lawsuit from the creditor or the employee, or other costs or penalties that the employer didn’t anticipate or budget for.

In the instance of garnishments for child support, employers could potentially feel the impact of laws designed to restrict travel. For instance, the Social Security Act was amended in 1997 with a sub-section that established the denial, revocation, or restriction of U.S. passports if the non-custodial parent has child support arrears of $2,500 or more. Additionally, some state agencies have the authority to deny or revoke drivers’ and professional licenses for past-due child support obligations .

If your business requires employees to travel internationally or employs drivers, these laws could impact an employee’s ability to do his or her job effectively and, by extension, impact the efficiency of your business.

Another current area of focus that could impact employers is in the creditor garnishment arena. Currently, the American Payroll Association is working with the Uniform Law Commission to establish a standardized processing for creditor garnishments through the Uniform Wage Garnishment Act, which proposes to standardize the wage-garnishment process for employers, employees and creditors. Currently, state laws differ significantly in their requirements regarding wage garnishment, from the beginning to the end of the garnishment, and are often outdated. This means businesses that operate in multiple states must identify and abide by these different legal requirements, which can potentially lead to processing errors, confusion, inefficiency and noncompliance.

Companies can help manage these challenges if they become familiar with garnishment laws and guidance from agencies such as the Federal Office of Child Support Enforcement, develop reliable and timely procedures for garnishment processing and ensure that policies are administered fairly for all employees facing a wage garnishment.

It may be useful to develop tools, resources and strong contacts with agencies, courts and garnishors. Staying close to these agencies may help your business remain aware of major changes to wage garnishment laws.

Consider participating in state and federally initiated pilot projects. These programs are valuable opportunities to positively build relationships, influence initiatives and provide needed feedback. Make sure you have established a way to monitor legislation that could affect garnishment processing.

Other steps an employer can take include participating with committees, attending conferences regarding wage withholding, and leveraging other contacts you’ve developed with the agencies, those imposing wage garnishments, or other employers.

4. Paper processing is the not the only option.

A study by the ADP Research Institute revealed that 7.2 percent of employees had wages garnished in 2013. Keeping pace with the proper and timely processing of wage garnishments is challenging for many businesses.

As wage garnishment volumes and laws intensify, garnishment processors have the option to use electronic funds transfer, or EFT, to save time, increase efficiency, streamline processes and potentially reduce costs.

Currently, virtually every child support state agency has the ability to accept child support payments via EFT, and some have even mandated employers to send payments electronically. Some tax levy agencies, trustees and student loan agencies also are implementing electronic payment capabilities. In addition to business efficiencies, EFT enables greater security of personally identifiable information, such as Social Security numbers.

Minnesota has passed legislation requiring employers to electronically file their response to a state tax garnishment summons with the state tax agency, and Wayne County Court in Michigan is piloting the option of electronic responses.

Electronic income withholding orders are already very popular. These enable states to electronically distribute income withholding orders and employers to electronically accept or reject them.

Clearly, wage garnishment can have a profound effect on the employee who is being garnished, as well as the employer who must implement the garnishment. It’s important for businesses of all sizes to understand the different types of wage garnishment, familiarize themselves with the laws governing them, and learn ways to accurately and efficiently process them.

Using best practices can help streamline an employer’s responsibilities and ease the potential anxiety an employee may feel with this sometimes-necessary workforce issue.

Julie Farraj is vice president of Garnishment Services for ADP Added Value Services. Comment below or email [email protected].

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Home > Definitions > Divorce & Family Law > Child Custody > Wage Assignment

Wage Assignment

What is Wage Assignment?

Wage assignments allow creditors to take money directly from an employee’s paycheck to pay off a debt. They are voluntary agreements between the employee and the creditor. Due to the fact that employees must sign documents authorizing a creditor to take money from their paycheck, wage assignments do not require court approval. These arrangements differ from wage garnishments, in which a creditor must go to court to obtain permission to collect part of a debtor’s wages. Moreover, the employee typically has the right to terminate the wage assignments, while one must go through a legal process to stop a wage garnishment. 

The United States often uses wage assignments to collect child support payments. Wage assignments may also be utilized to pay off other debts such as unpaid taxes or loans. 

Key Takeaways

• A wage assignment is a voluntary agreement that allows creditors to collect money directly from an employee’s paycheck to repay a debt.
• Wage garnishments are used to repay various debt obligations such as taxes, child support, or loans. 
• State laws regulate the conditions and limitations for wage assignments. 

Wages Assignment Limitations

Wage assignments are not regulated by federal law and therefore are not required to follow the Federal Consumer Credit Protection Act. The laws concerning wage assignment vary from state to state. Following are a few examples of restrictions in various states:

• Illinois does not allow wage assignments unless the debt has gone unpaid for at least 40 days.
• In West Virginia, wage assignments are limited to 25% of an employee’s take-home earnings. 
• Employers in Texas have no statutory obligation to honor voluntary wage assignments, but they may be required to do so under a contractual obligation.
• New York does not allow wage assignments to exceed 10% of one’s gross income.
• A spouse or domestic partner must also sign the wage assignment contract if the employee is married or has a domestic partner in Washington or Wisconsin.
• Some states may require that the agreements be renewed annually and prohibit the assignments from lasting longer than three years. Additionally, various states allow wage assignments only when it is used to pay child support .

Bottom Line

W age assignments are undoubtedly a complicated subject. As a matter of fact, plenty of people are not aware of the differences between wage assignments and wage garnishments . Also, although wage assignments are voluntary, employees are not always aware that they agreed to them. Wage assignment provisions may be hidden among the fine print in consumer contracts and loan documents, and employees may not learn about these clauses until it is too late. This is why it is essential to hire proper legal representation to review important contracts before signing them. A seasoned attorney will be able to help you handle these complex arrangements.

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Employment law clinic—significant achievements for 2023-24.

During the past academic year, the Employment Law Clinic has continued its work helping pro se plaintiffs in employment discrimination cases in federal court. This work includes representing pro se plaintiffs as their Settlement Assistance Counsel in individual discrimination cases and representing pro se plaintiffs in their appeals to the Seventh Circuit Court of Appeals. In addition, the Employment Law Clinic has expanded its work with pro se plaintiffs by participating in the William J. Hibbler Memorial Pro Se Assistance Program. This program allows students in the Employment Law Clinic to provide pro se plaintiffs with advice about procedural issues in their cases. Some of the significant developments in a few of the Clinic’s cases are detailed below.

Settlement Assistance Cases

Clinical Professor Randall D. Schmidt and his students are appointed on a regular basis to provide representation to pro se plaintiffs at settlement conferences. Since starting this project in early 2021, Professor Schmidt has been appointed as Settlement Assistance Counsel for pro se plaintiffs in twenty employment discrimination cases. Although most of these cases were pending in the Eastern Division of the Northern District of Illinois, he has also been appointed in cases pending the Western Division of the Northern District of Illinois and in the Central District of Illinois.

These cases allow students to interview the client, research the legal and factual issues in the case, draft a settlement demand letter, represent the client at a settlement conference, and, if the case settles, draft the settlement agreement.

Professor Schmidt and his students have been very successful in resolving these cases. Of the twenty cases Professor Schmidt and his students have handled, fourteen were settled after one of more mediation sessions. Five are still pending awaiting the initial or follow-up settlement conference. One case did not settle and the plaintiff recently lost her case when the court granted the defendant’s motion for summary judgment.

Below are a few examples of cases that Professor Schmidt and his students handled during the 2023-24 academic year. Each of these cases resulted in a settlement after one or more mediation sessions. Pursuant to the settlement agreements in these lawsuits the details of the settlements are confidential.

Jackson v. Robert W. Baird & Co. , No. 1:22-cv-04852 (Settled 09/11/23)

In October 2016, Devonia Jackson began working for Robert W. Baird & Co. (“Baird”) as an Administrative Assistant in its Milwaukee, Wisconsin office. Baird is a global investment-banking firm that provides private investment services to mid-market businesses.

While employed by Baird, Ms. Shaw received several promotions and pay increases in recognition of her excellent performance. In 2018, Ms. Jackson relocated to Baird’s Virginia office. In two months she raised concerns over the abusive behavior of a lead banker and transferred to the Chicago office.

In 2020, Ms. Jackson began reporting to a new supervisor. From the beginning of their professional relationship, the new supervisor treated Ms. Jackson differently from other employees. The supervisor was often dismissive of Ms. Jackson’s concerns. Without asking Ms. Jackson, she reassigned Ms. Jackson’s to work with junior bankers. The supervisor told Ms. Jackson that she was “scared of working” with her, despite being Ms. Jackson’s supervisor.

Suddenly and without warning, Baird discharged Ms. Jackson in August 2021. In support of its decision to discharge Ms. Jackson’s termination, Baird cited two incidents in which Ms. Jackson was allegedly insubordinate. Ms. Jackson disputed that she was insubordinate during either incident. Moreover, no one at Baird raised concerns about either incident until Ms. Jackson was discharged. Ms. Jackson’s supervisors neither warned Ms. Jackson about the incidents before her termination nor gave her a chance to explain herself, even though she had a history of being a high-performing employee.

In addition, Baird did not terminate other similarly situated, substantially younger, Administrative Assistants whose job performance and/or behavior at work was alleged to have been insubordinate. After discharging Ms. Jackson, Baird assigned Ms. Jackson’s duties to younger employees.

Finally, after Ms. Jackson left Baird, she found out that between August 2020 and August 2021 Baird terminated ten administrators, all of whom were over the age of forty. The employees who had been terminated were also highly experienced—many had over ten years of experience at Baird— and in an older age group. They, too, were replaced by younger employees.

Ms. Jackson filed a pro se complaint against Baird and alleged that its termination of her employment violated the Age Discrimination in Employment Act. During discovery, the parties indicated to the court that they were interested in participating a settlement conference. Accordingly, the court appointed Professor Schmidt to serve as Mr. Lara’s Settlement Assistance Counsel. The parties were able to agree to a settlement during the initial settlement conference and the case was dismissed.

Johnson v. P.F.A. Systems, Inc. , No. 1:22-cv-0719) (N.D. Ill.) (Settled 03/25/24)

P.F.A. Systems, Inc., is a regional trucking company that transports liquid hazardous materials. P.F.A. hired Seneca Johnson as a truck driver in February 2022. At the time he was hired, Mr. Johnson told his supervisor that as an accommodation to his disability (a lower back injury), he needed to be assigned to drive trucks with automatic transmissions. Mr. Johnson was told that it would not be a problem to provide this accommodation to him.

Despite P.F.A.’s assurance that it would provide Mr. Johnson with an automatic transmission truck, P.F.A. forced Mr. Johnson to drive a 13-speed manual transmission truck, which caused severe pain, numbness in his leg and exacerbated Mr. Johnson’s back injury. Mr. Johnson complained to P.F.A. about its failure to assign him to a truck with an automatic transmission. In response, P.F.A. informed Mr. Johnson that the automatic truck had been given to another driver because that driver’s truck had to be fixed.

A few days later, Mr. Johnson again requested that P.F.A. accommodate his disability by assigning him to a truck with an automatic transmission. His immediate supervisor told him that he needed to “deal with it or find another job.” The supervisor also said, “P.F.A. and I don’t care about people with disabilities. We’re not going to make special accommodations for people with disabilities.” Mr. Johnson told the supervisor that he and P.F.A. were discriminating against people with disabilities. The supervisor retorted that P.F.A. does not hire people with disabilities. In response to Mr. Johnson’s statement that it is against the law for a company to turn down a qualified person because of their disabilities, the supervisor said, “Then you are at the wrong company. We don’t play by those rules.”

A week later. P.F.A. discharged Mr. Johnson claiming it did not have enough work for him. At the same time, P.F.A. was running help wanted ads seeking truck drivers.

Mr. Johnson filed a lawsuit against P.F.A. alleging that it violated the Americans with Disability Act by (1) failing to provide a reasonable accommodation for his disability and (2) retaliating against him for asserting his statutory rights. After most of the discovery had been competed in the case, Professor Schmidt was appointed to represent Mr. Johnson as his Settlement Assistance Counsel. The matter was resolved a few months later.

Lara v. Health Track Sports and Wellness, LLC , No. 1:23-cv-00487 (N.D. Ill.) (Settled 03/19/24)

Lazaro Lara worked for Health Track Sports and Wellness, LLC, (“Health Track”), a health and fitness club, for sixteen years. Mr. Lara was diagnosed with ADHD, anxiety, and depression, which qualifies as an impairment under the Americans with Disabilities Act. Early in his employment, Mr. Lara informed his employers of his disability.

Beginning in April 2020, Health Track subjected Mr. Lara to a severe and pervasive hostile work environment. Mr. Lara’s supervisor and his co-workers routinely harassed Mr. Lara on the basis of his disabilities, calling him “crazy” and taunting him that he “suffer[ed] from schizophrenia.” They hounded Mr. Lara about his medical issues, telling him that his medication was not working and that he needed additional medical intervention. They would change his schedule without notice, including forcing him to work in person during the COVID pandemic while others were allowed to stay home. To ensure compliance with their orders, Health Track threatened to strip Mr. Lara of his health insurance.

Mr. Lara suffered damage to his mental health that significantly affected his quality of life because of the severity of Health Track’s hostile work environment. As Lara’s condition worsened, he took two steps to try to stop the harassment. First, he requested a few specific accommodations: that all of his work tasks be put in writing, that he receive clear instructions, that he be put on a schedule to keep track of his hours and to avoid management changing it without notice, and that he have access to a quiet place as needed. Health Track, however, failed to provide these requested accommodations.

Second, after Health Track ignored his requested accommodations, he filed a charge of discrimination with the Equal Employment Opportunity Commission in January 2021. In the charge, Mr. Lara alleged that he had requested reasonable accommodations for his disabilities and Health Track refused to provide those accommodations. Mr. Lara further alleged that his co-workers subjected him to harassment because of his disabilities.

Subsequently, in late March 2021, Mr. Lara attended a meeting with his supervisors for the express purpose of discussing Mr. Lara’s accommodations not being met and the harassment. However, during the meeting, the supervisor tried to convince Mr. Lara that he was not mentally stable and that Mr. Lara needed to find someone to “take care of his affairs.” Further, the supervisor told Mr. Lara that he would never allow Mr. Lara to work due to his mental condition—even though Mr. Lara’s doctor had cleared him to work—and that Health Track did not have any hours for him if he tried to return. The supervisor pushed Mr. Lara to resign, guaranteeing him that he could retain health insurance through COBRA or the American Rescue Plan if he chose to resign. Mr. Lara refused to resign at any point during the meeting or thereafter. At the meeting’s end, the supervisor told Mr. Lara to take a few days off, assuring him that Health Track would investigate the issues and get back to him with their conclusions.

The next time Mr. Lara heard from Health Track was two weeks later in April 2021. At that time, Health Track informed Mr. Lara that he had voluntarily resigned and that he was no longer an employee of Health Track.

Mr. Lara filed a lawsuit against Health Track alleging that its actions violated the Americans with Disabilities Act. In his complaint, Mr. Lara alleged that Health Track failed to accommodate Mr. Lara’s disabilities and subjected him to a severe and pervasive hostile work environment due to his disabilities during his employment. Mr. Lara also claimed that his discharge was in retaliation for his filing the EEOC charge and complaining about the discrimination and harassment.

Shortly after the case was filed, the court appointed Professor Schmidt to serve as Mr. Lara’s Settlement Assistance Counsel. After several settlement conferences, the parties were able to agree to a settlement and the case was dismissed.

Shaw v. Chicago School of Professional Psychology , No. 1:23-cv-00631 (N.D. Ill.) (Settled 09/11/23)

Donna Shaw worked for the Chicago School of Professional Psychology (“TCSPP”) for seven years. TCSPP is an accredited, nonprofit university that offers bachelor’s, master’s, and doctoral degree programs in psychology and related behavioral science fields. TCSPP has in-person campuses in seven metropolitan areas, including Chicago and San Diego, and an online campus.

Throughout her time at TCSPP, Ms. Shaw was discriminated against due to her race, color, and age. Most significantly, Ms. Shaw’s superiors created a hostile work environment for Ms. Shaw and repeatedly denied her promotions to positions that she is qualified to fill. On each occasion, instead of promoting Ms. Shaw, TCSPP promoted younger, less qualified, non-Black individuals. When Ms. Shaw complained about her treatment and the denial of promotions, TCSPP retaliated against her.

Ms. Shaw filed a pro se complaint of discrimination against TCSPP. In her complaint, Ms. Shaw alleged that TCSPP’s failure to take steps to end and prevent the hostile work environment and its failure to promote her violated Title and the Age Discrimination in Employment Act. Shortly after TCSPP filed its answer, the court appointed Professor Schmidt as Ms. Shaw’s Settlement Assistance Counsel and set the case for a settlement conference. The parties were able to reach a settlement during the settlement conference and the case was dismissed.

William J. Hibbler Memorial Pro Se Assistance Program

In early 2024, the Employment Law Clinic expanded its work with pro se litigants by participating in the William J. Hibbler Memorial Pro Se Assistance Program (“Hibler Help Desk”). The Hibbler Help Desk is administered by the People’s Law Center in cooperation with the District Court and the Chicago Bar Foundation. It is “staffed” by volunteer attorneys. It serves pro se litigants in civil cases filed or to be filed in the federal court for the Northern District of Illinois, Eastern and Western Divisions. A Program attorney provides pro se litigants with limited legal assistance with their cases. In particular, the Hibbler Help Desk provides pro se litigants with help on procedural issues, not substantive legal advice.

The Employment Law Clinic began helping pro se litigants in February 2024. Since then, students in the Clinic have met with and assisted more than twenty-five pro se litigants. The assistance we have provided includes helping clients complete the documents needed to file a pro se employment discrimination complaint; providing guidance on submitting Fed. R. Civ. P. 26(a) initial disclosures, written discovery requests and responses; help in complying with the NDIL’s rules regarding motions to compel discovery; explaining the status of the pro se’s case or appeal; referring clients to resources that could assist them with the substantive legal issues in their cases; and referring pro se’s other providers of civil legal services or to social service agencies.

Appellate Cases

The Employment Law Clinic represents clients in a number of appeals in the US Court Appeals for the Seventh Circuit. In some of these appeals, the Employment Law Clinic represents the appellants in their appeals. In other reconsiderations appeals, the Clinic is contacted and asked to participate as amicus curiae. Students working on these appeals write the briefs and present oral argument to the Seventh Circuit. Both Professor Schmidt and Lecturer in Law James Whitehead supervise the students in the appeals pending in the Seventh Circuit.

Bell v. DeJoy Appeal No. 24-1478 (7th Cir.)

Mary Bell is currently working for the United States Post Office (“Postal Service”). On November 22, 2022, Ms. Bell filed her pro se Complaint alleging that the Postal Service discriminated against her with respect to overtime pay and by refusing to downgrade her position. In response, the Postal Service moved to dismiss the complaint, in part, because Ms. Bell had not received a right-to-sue letter from the Equal Employment Opportunity Commission before filing her complaint. Thus, according to the Postal Service, Ms. Bell’s complaint was premature. Contrary to the Postal Service’s motion, Ms. Bell had in fact received a right-to-sue letter from the EEOC after filing her complaint and prior to the Postal Service’s filing of its motion to dismiss. This fact was not brought to the court’s attention, even though the Postal Service had received a copy of the right-to-sue letter, the court agreed and dismissed the complaint.

The Employment Law Clinic decided to submit an amicus brief in support of Ms. Bell because this case presents several issues of significant importance to the rights of individuals to pursue federal employment discrimination claims in court. In particular, the Employment Law Clinic argues that the district court incorrectly dismissed Ms. Bell’s claims because she had not filed an Amended Complaint raising the claims within ninety days of her receipt of a right-to-sue letter. The court, however, ignored the fact that she had raised the claims in her prematurely filed complaint before receiving the right-to-sue letter. In so doing, the district court disregarded the Seventh Circuit’s settled law that her receipt of the right-to-sue letter before the dismissal of her complaint had cured the Complaint’s premature filing.

The case is currently being briefed.

Miko Thomas v. JBS Green Bay Appeal No. 24-1404 (7th Cir.)

Mr. Thomas works for JBS Green Bay, one of the world’s largest meat producers. In his complaint, he alleged that his employer discriminated against him due to his color with respect to several terms and conditions of his employment, in violation of Title VII of the 1964 Civil Rights Act. Relying on the Seventh Circuit’s standard for establishing justiciable adverse employment actions in discrimination cases, the district court dismissed Mr. Thomas’s Complaint and Amended Complaint. The court concluded that the actions he complained of were not “materially adverse” as a matter of law.

Mr. Thomas appealed and asked the Employment Law Clinic to represent him in his appeal. The Employment Law agreed to do so because of its interest in clarifying what adverse actions are actionable under Title VII, the ADA and other anti-discrimination statutes.

After the Employment Law Clinic agreed to represent Mr. Thomas, and six weeks after the district court’s final decision in Mr. Thomas’s case, the US Supreme Court, on April 17, 2024, issued its opinion in Muldrow v. City of St. Louis , 601 U.S. ___, 144 S. Ct 967 (2024). As the Employment Law Clinic predicted, the Court held that, although an employee must show some harm in order to prevail in a Title VII discrimination suit, an employee does not need to show that the injury satisfies a heightened significance test or was “materially adverse.” In doing so, the Court mentions Seventh Circuit precedent as an example of courts using an incorrect standard for determining what actions constitutes adverse action for purposes of Title VII.

Thus, the primary issue in Thomas is whether the district court erred in dismissing Mr. Thomas’s case in light of the Supreme Court’s opinion in Muldrow.

The case is currently being briefed and an oral argument is expected to take place this fall.

Sapp v. Forest Preserves of Cook County , Appeal No. 22-2865 (7th Cir.)

Tyler Sapp served as a full-time Police Officer for the Forest Preserve District of Cook County, Illinois (“Forest Preserves”) from January 5, 2009, until his employment was terminated in January 2019. In 2018, Mr. Sapp went on a leave of absence under the Family and Medical Leave Act so that he could receive treatment for a for bipolar disorder. In July 2018, he was released by his personal doctor to return to work with no restrictions. The Forest Preserves, however, refused to allow him to return to work and required that he undergo an independent medical examination to determine if Mr. Sapp was fit to return to work from his medical leave. Mr. Sapp agreed to do so. The doctor who performed the IME, however, concluded that Ms. Sapp was unfit to return to work as a Forest Preserves Police Officer. Mr. Sapp then requested that the Forest Preserves engage in an interactive process with him to determine if the Forest Preserves could accommodate his condition. The Forest Preserves refused to do so and instead discharged Mr. Sapp.

Mr. Sapp brought a disability-discrimination claim against the Forest Preserves under the Americans with Disabilities Act. He alleged that he is a qualified individual with a disability and that he had been denied the same terms and conditions afforded to his co-workers who were similarly situated. In particular, Mr. Sapp alleged that the Forest Preserves was aware of his disability and failed to reasonably accommodate his disability despite accommodating the disabilities of other Forest Preserves Police Officers.

After the close of discovery, the parties filed cross-motions for summary judgment. The district court issued its Memorandum Opinion and Order granting summary judgment to the Forest Preserves and denying Mr. Sapp’s motion. Mr. Sapp appealed the court’s decision.

On appeal, Mr. Sapp requested that the Employment Law Clinic represent him in his appeal. The Employment law Clinic agreed to do so. The primary issue the Employment Law Clinic planned to address in the appeal was whether the district court erred in granting summary judgment to the Forest Preserves because a reasonable jury could have found that the Forest Preserves’ failure to engage in the interactive process led to a violation of the ADA due to the failure to identify a reasonable accommodation. Instead of engaging with Mr. Sapp to find a solution, the Forest Preserves thwarted discussions by terminating his employment.

Shortly after filing an appearance in the appeal, the matter was set for mediation before the Seventh Circuit’s Mediation Office. After several mediation sessions, the parties were able to reach a settlement in the case and the appeal was dismissed.

Franklin Township Community School Corporation , Appeal No. 23-2786 (7th Cir)

In 2012, Wesley Tedrow was hired by Franklin Township School Corporation (“School Corporation”) as a teacher. In November 2019, Mr. Tedrow was preliminarily offered a higher-paying position to teach sixth grade at a different school in Indiana. The School Corporation, however, refused to provide Mr. Tedrow with a reference, despite having provided such references in the past. The School Corporation’s refusal to provide the reference resulted in the other school resulting in the rescinding of its offer.

Mr. Tedrow filed a charge of discrimination with the Equal Employment Opportunity Commission (EEOC), alleging that the School Corporation declined to provide him with a reference because his sex and disability.

After Mr. Tedrow filed his initial charge, the School Corporation demanded that Mr. Tedrow submit to an Independent Medical Examination to determine if he was using steroids. The IME was inconclusive. The School Corporation then transferred Mr. Tedrow to different school in the district.

Mr. Tedrow filed a second charge with the EEOC alleging that his transfer was discriminatory and in retaliation for his first charge. The EEOC issued Mr. Tedrow a notice of right to sue and Mr. Tedrow filed suit against the School Corporation alleging discrimination and retaliation in violation of Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act of 1990, and the Genetic Information Nondiscrimination Act of 2008.

After discovery was completed, the School Corporation filed a motion for summary judgment on all claims, which was granted by the district court. The court dismissed Mr. Tedrow’s discrimination claims on the basis that: (1) he failed to properly plead his allegation that the School Corporation unlawfully refused to provide him with a reference, and (2) his transfer did not constitute an adverse employment action as required by Title VII because it did not include a reduction in compensation or benefits.

The Employment Law Clinic agreed to represent Mr. Tedrow on appeal because the issue of what constitutes actionable adverse action was an issue that was then pending before the US Supreme Court in in Muldrow v. City of St. Louis , 601 U.S. ___, 144 S. Ct 967 (2024), In addition, several other circuit courts of appeal hard recently issued opinions rejecting their prior precedent on what adverse actions are actionable.

Harris v. Vision Energy LLC , No. C-2300406 (Ohio Ct. App.)

The Employment Law Clinic is often requested to submit amicus briefs in cases in pending before the Illinois Supreme Court, the Illinois Court of Appeals, and appellate courts in other jurisdictions. This year, the Employment Law Clinic was asked to submit an amicus brief concerning the history of the Illinois Wage Payment and Collections Act (“IWPCA”) in Harris v. Vision . The Employment Law Clinic previously submitted a similar brief in Johnson v. Diakon Logistics, 44 F.3d 1048 (7th Cir. 2022).

In Harris , Jeff Harris, a resident of Ohio, worked for Vision Energy, an Ohio company. All of the work Mr. Harris provided to Vision took place in Illinois. In exchange for Mr. Harris’s labor, Vision promised him, among other compensation, a four percent equity interest in a yet-to-be-formed corporation. When Vision failed to pay him the value of the promised equity interest, Mr. Harris filed a complaint against Vision in Ohio to recover that sum under the IWPCA. Vision moved to dismiss Mr. Harris’ IWPCA claim based on a choice-of-law provision in the parties’ contract, which stated that the agreement was to be governed by Ohio law. The court granted Vision’s motion and dismissed the IWPCA claim.

Mr. Harris appealed the court’s dismissal of his IWPCA claim and his counsel requested that the Employment Law Clinic submit a brief explaining the history and strong public policy behind the IWPCA. The Employment Law Clinic agreed to do so and submitted an amicus brief on behalf of Mr. Harris.

In the amicus brief, the Employment Law Clinic argues that the history of the IWPCA and Illinois’s prior wage-theft statutes demonstrates the importance that the Illinois legislature has placed on protecting its workers and the centrality of preventing wage theft to Illinois’s public policy. The amicus brief also demonstrates that Illinois has a materially greater interest than Ohio in the resolution of the dispute because Mr. Harris performed all his work for Vision in Illinois. The lower court’s decision that requires Mr. Harris to bring his wage theft claim against Vision under Ohio’s wage laws, is manifestly repugnant to the fundamental policies of Illinois because Ohio’s wage protection laws would not have provided him with a viable claim or with any remedy for the work he performed solely in Illinois.

Finally, the Employment Law Clinic argued that the choice-of-law provision in the Harris-Vision Agreement did not override the territorial limitations of Ohio’s wage protection statutes, which do not apply extraterritorially to work performed exclusively outside of Ohio. Courts across the country, including Ohio courts, have long recognized that a state’s territorial limitations apply even when that state’s law is selected for application by a choice-of-law provision.

The appeal is pending in the Ohio Court of Appeals.