Mass-Peculiarities: An Employers Guide to Wage & Hour Law in the Bay State 2022 Edition

© 2022 Seyfarth Shaw LLP Massachusetts Wage & Hour Peculiarities, 2022 ed. | 141 Wage assignments that are greater than $3,000 have different and additional requirements. 822 First, a wage assignment can only secure a debt that was incurred prior to or at the same time as the assignment’s execution. The written wage assignment must list its date of execution, the amount of money or goods the employee received in return, and any interest rate that applies to the loan. The wage assignment must also state that 75 percent of the employee’s weekly earnings are exempt, and the employee must sign it personally (the signature of an attorney acting as the employee’s agent will not suffice). Wage assignments of over $3,000 are not valid unless the employee receives a copy of the assignment upon its execution. The employer must also receive a written copy, accompanied by an account listing the balance due, the amount already repaid, and the date of every payment along with an indication of whether the payment will apply to interest, principal, or other loan fees. Wage assignments of over $3,000 are only valid for two years. 823 If a wage assignment meets the applicable statutory requirements, it will be enforceable even if the employee later declares bankruptcy. 824 Nonetheless, wage assignments cannot interfere with deductions from wages for union dues or health insurance premiums, or drop the employee’s pay below minimum wage. 825 XI. GARNISHMENTS While wage assignments are voluntary arrangements between employees and third parties, garnishments are involuntary. Wages are typically garnished when a court orders an employer to withhold a portion of an employee’s after-tax earnings to repay a debt owed to a third party. 826 Wage garnishments are carefully regulated to avoid abuse by predatory lenders and to ensure that unrestricted garnishments do not encourage employers to terminate employees subject to garnishments because the employees are perceived as untrustworthy. 827 Massachusetts law and the federal garnishment statute, known as the Consumer Credit Protection Act (CCPA), regulate garnishments in different ways. 828 In general, the law permitting the smallest garnishment controls. 829 Because the Massachusetts law governing garnishments is more restrictive in some ways, but federal law is more restrictive in other ways, employers must be aware of both the state and federal requirements. Employers should comply with the more restrictive rule in any given 822 M.G.L. ch. 154, §§ 3-4. 823 Id . 824 See Citizens’ Loan Ass’n , 196 Mass. at 532 (“The assignment to the plaint iff is a lien which . . . was not affected by the discharge in bankruptcy of the assignor.”). See also Raulines v. Levi , 232 Mass. 42, 44 (1919) (“ [i]f valid in it s incept ion the assignment remained in force notwithstanding the discharge of the plaint iff in bankruptcy”). 825 See M.G.L. ch. 154, § 8; M.G.L. ch. 151, § 1 (set t ing the Massachuset t s minimum wage). 826 15 U.S.C. § 1672(c) (“The term ‘garnishment’ means any legal or equitable procedure through which the earnings of any individual are required to be withheld for payment of any debt .”); DOL Wage & Hour Fact Sheet #30 (Nov. 2016) (wages can also be garnished by the IRS or state tax collect ion agency levies for unpaid taxes and by federal agencies for non-tax debt s owed to the federal government ). 827 15 U.S.C. § 1671(a)(1)-(2). 828 15 U.S.C. § 1671 et seq .; M.G.L. ch. 246, § 28. 829 15 U.S.C. § 1677(1).