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Wage garnishment in California. I am a 1099 independent contractor. I have separate biz. How can I stop the company from garnish
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So I have my own company and I contract with another larger company that pays me for doing work for them. They 1099 me and at the end of the year I file my taxes as a business taking biz deductions, etc. The other day an old judgment creditor served the company that I work for with a wage garnishment for me. I don't think they have a right to garnish my independent contractor wages as I am not an employee. However, the person that does payroll doesn't know much about it and is afraid not to take 25% from my next check. What are the laws here and what can I say or show to this payroll person to convince them not to apply the garnishment? It is my understanding that garnishing an indep contractor is possible, but that it needs to be done through a different mechanism...am I correct? I
Employers receiving a wage garnishment order have a tough time navigating the legal waters of what they must withhold for people in your situation, who fall into this area of people who are receiving money for services but not a normal wage or salary. In particular, the employer must complete and give to the levying officer, under oath, the Employer's Return, Judicial Council Form WG-005. I have linked below to the wage garnishment judicial council forms. The choice in box 2 is the employer must state either that you are not employed or are employed now. There is no third option, such as not an employee of wages, but is an independent contractor.
The instructions to the employer threaten that if they violate the law and fail to withhold the proper amount, they could be criminally prosecuted. No employer wants the heavy hand of the law for an employee! Even if the employer seeks their legal counsel, most likely that lawyer is not well versed on this area and will advise the employer to simply pay the correct amount and not get into a legal battle over it. Perhaps the person who handles the payroll or human resources for your company knows how to handle it, but they will probably do whatever they feel is best to avoid a fight with the company's lawyers, who want to garnish your earnings to satisfy a judgment.
If they use the other Judicial Council forms to enforce a judgment on the funds due to you as an independent contractor, it is likley EJ-130, Writ of Execution. If they use that form, it does not have a 25% cap, it is all of the amount owed to the judgment debtor at the time the writ was served. Thus, you might receive nothing, if they use one of the other enforcement mechanisms.
By: Robert Stempler (Please see DISCLAIMER, below)
CONSUMER LAW OFFICE OF ROBERT STEMPLER
A Professional Law Corporation
75% of wages are automatically exempt from garnishment. However, if you are an independent contractor, the 25% limit does not apply, and the creditor can levy upon 100% of the payments from your "employer."
