Are Your Commissions Subject to Garnishment?

Many licensees believe that because they are independent contractors, their commissions cannot be garnished. This is incorrect. Ohio has several statutes that apply to a judgment creditor’s collection on its judgment from a judgment debtor. One is garnishment of personal earnings and the other is garnishment of property other than personal earnings. The former is typically used to garnish wages paid by an employer to an employee. The latter is used to garnish compensation paid for personal services, including commissions, bonuses, or salary.

The Federal Consumer Credit Protection Act has a more inclusive definition of earnings than Ohio law. Under this federal law, “earnings” includes any compensation paid or payable for personal services, whether denominated as wages, salary, commission, bonus, or otherwise. The Act also prohibits debtors from obtaining more than twenty-five percent of a person’s disposable earnings and includes commissions within that protection.

Ohio law affords judgment debtors certain rights to avoid wage garnishment. If you have multiple debts, one option is to request the appointment of a trustee. Here the county clerk of courts acts as your trustee to make payments to your creditors. Under the plan, you will pay a monthly pre-determined amount of money to the clerk of courts. The clerk of courts then uses that money to pay your creditors. If you participate in a trusteeship, the creditors are prohibited from using other methods to collect the judgment from you.

If you dispute the amount the judgment creditor is claiming you owe, you have the option to request a hearing. Creditors cannot garnish worker’s compensation funds, unemployment compensation funds, disability payments, child, or spousal support payments. At the hearing, the court will determine what amount the judgment creditor can garnish from your earnings.

The judgment creditor can also garnish other property from you, such as bank accounts. Like wage garnishments, you have a right to a hearing if you dispute the amount of money the judgment creditor is seeking.

The best way to avoid garnishment is to avoid getting a judgment against you in the first place. This means opening all certified mail and answering any complaints filed against you in court. If a judgment is rendered against you, you must notify the Superintendent of Real Estate. Failure could result in additional administrative proceedings against your license.

Although discussions surrounding judgments and garnishment of earnings are unpleasant, they are necessary. Many licensees erroneously believe they are exempt because they are independent contractors working for a commission. More information about judgment collection law and wage garnishment at the Franklin County Law Library.