Voluntary wage assignment’s (VWA’s), while legal under federal law, are not wage garnishments (a wage garnishment is the formal process of deducting wages after a court order has been awarded). A VWA is an employee’s voluntary agreement to allow their employer to turn over a specified amount of the employee’s wages to a creditor. VWA’s are governed by a written contract between the parties and unless a state’s common law or statutes directs otherwise, they will be governed under contract law. However, federal law requires that employees be able to revoke a VWA at will, but imposes no time limits or methodology requirements.
The treatment of VWA’s vary by state. Some states allow VWA, some prohibit them, and some are silent as to VWA’s – i.e. the muddled middle states. The law regarding VWA’s is unclear in muddled middle states, including Michigan. In Michigan and other muddled middle states, employers may decline to implement VWA’s. If a creditor wants to garnish wages, they may have to file a collection lawsuit in court.
To combat confusion, employers may want to consider drafting internal procedures that reflect state law requirements and adopting a company policy stating that they cannot assign earned or unearned wages without employee consent, unless doing so is contrary to law.
This article was written by Ryan Hansen, Law Clerk
