The Arizona legislature recently passed a bill that would amend Arizona Revised Statutes Section 12-1574 to change how writs of garnishments can be issued and served on garnishees, including employers. House Bill (HB) 2230 went to Governor Doug Ducey for signature on March 19, 2019, and he is expected to sign it soon.
If signed by Governor Ducey, the law would allow service of a writ of garnishment on a garnishee (the entity or person holding disposable earnings for a judgment debtor that may satisfy a debt payable to the judgment creditor) by certified mail, return receipt requested. If a judgment creditor serves the garnishee via this newly permitted and less formal service method, the garnishment papers (writ, summons, etc.) will be sent to the name and address of the garnishee contained in the writ of garnishment as drafted by the judgment creditor. A creditor could also opt for (but would no longer be required to) execute conventional service on a garnishee’s authorized agent, such as a statutory agent. If served via certified mail, the date of service would be the date the garnishee receives the writ, meaning an answer would need to be filed within 30 days after the date the writ was received.
Because HB 2230 says service of writs of garnishment will be able to occur by regular means of service (e.g., statutory agent or hand delivery) or certified mail, this new legislation creates the potential for various problems for employers that have multiple locations where they might receive such mailings. In theory, the creditor could mail the writ to the location where the debtor works (or any employer location for that matter) and then claim service was valid, although that could potentially be disputed. This is of particular importance to employers because failing to timely file an answer to a garnishment may result in a default judgment being entered against the employer-garnishee for the full amount of the underlying judgment against the current or former employee. As a result, employers that do not file timely answers to garnishments can end up paying the full amounts of their employees’ debts.
In light of this legislative development and its implications, employers may want to revisit their garnishment procedures and processes and consider what steps, if any, they may want to put in place to promptly escalate internally all garnishment-related papers received by employees and agents (even via certified mail) so responses and appearances can be made to protect the employer’s rights. Employers also often fail to collect the fees to which they are entitled as part of the garnishment process. Auditing internal processes and deploying a standard operating procedure can help ensure all aspects of garnishment-related proceedings run smoothly without adding to the employer’s bottom line or exposing the employer to additional legal risk.
Further information on garnishments is provided in the O-D Comply: Garnishments, a comprehensive subscription-based product compiling state law garnishment requirements in a concise, user-friendly formats with links to state garnishment forms. O-D Comply: Garnishments is updated and provided to O-D Comply subscribers as the law changes.