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My Business In New York Has Been Served With An Income Execution. What Must My Business Do?

  • By: David Rich
  • Published: October 5, 2012
What Is An Income Execution, And Whom Does It Come From?

A ” ‘judgment debtor’ ” is an individual or entity against whom a money judgment is entered.  See N.Y. C.P.L.R. 105(m).  Often, when the judgment debtor is an individual, he is also an employee of an employer.

The ” ‘judgment creditor’ ” is the individual or entity in whose favor the money judgment is entered.  See N.Y. C.P.L.R. 105(l).

In New York, an “income execution” is one method of enforcing a money judgment.  The income execution operates on the judgment debtor’s earnings from wages, salary, and the like.  See N.Y. C.P.L.R. 5231(c)(1).  The income execution is a continuing levy.

The judgment creditor’s lawyer drafts the income execution and directly delivers it to the sheriff.  See N.Y. C.P.L.R. 5231(b).  The New York statute governing income executions, N.Y. C.P.L.R. 5231, sets forth the text required in an income execution.  See N.Y. C.P.L.R.

Before the sheriff may serve an income execution on the judgment debtor’s employer, the sheriff must serve it on the judgment debtor himself.  See N.Y. C.P.L.R. 5231(d).  If, within 20 days of such service, a judgment debtor who is an individual does not start making payments on the income execution himself, then the sheriff may serve the income execution on the judgment debtor’s employer.  See N.Y. C.P.L.R. 5231(e).

Often, lawyers or non-lawyers in New York colloquially refer to an income execution which is served on the judgment debtor’s employer as a “wage garnishment.”  See N.Y. C.P.L.R. 105(i) (defining a ” ‘ garnishee’ “).

When An Employer Has Been Served With An Income Execution, What Must The Employer Do?

When an employer is served with an income execution as to a judgment debtor who is the employer’s employee, the employer must withhold 10% (ten percent) of the employee’s earnings each payday and turn over that amount to the sheriff.  N.Y. C.P.L.R. 5231(b), 5231(f).

If the employer terminates the employee’s employment or the employee quits, then the employer’s obligation on the wage garnishment ceases, unless the employer rehires the employee within ninety days, in which case the wages or salary that the employee earns after he resumes employment with the employer are subject to the 10% levy.  See N.Y. C.P.L.R. 5231(f).

If the employer does not make each periodic deduction and pay it to the sheriff, then the judgment creditor may bring a special proceeding against the employer to compel the employer to do so, and to collect accrued installments.

If, in the special proceeding, the court finds that the income execution is valid, and that the employer failed without justification to make the required 10% deduction, then the employer will itself be held liable to the judgment creditor for earnings that the employer should have withheld, up to the amount owed on the judgment.  See, e.g., Franklin Nat’l Bank v. Brita Homes Corp., 35 A.D.2d 550, 313 N.Y.S.2d 248 (2d Dep’t 1970).

If your company needs assistance or guidance on a labor or employment law issue and your company is located in the New York City area, call Attorney David S. Rich at (347) 941-0760.

About the Author David S. Rich is the founding member of the Law Offices of David S. Rich, LLC,
a New York Employment and Business Litigation Law Firm, in New
York City and in Englewood Cliffs, New Jersey...Read more