illinois wage assignment act (740 ilcs 170)

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Illinois Compiled Statutes > 740 ILCS 170 – Illinois Wage Assignment Act

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Terms Used In Illinois Compiled Statutes > 740 ILCS 170 - Illinois Wage Assignment Act

• Appraisal : A determination of property value.
• Assets : (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
• Bankruptcy : Refers to statutes and judicial proceedings involving persons or businesses that cannot pay their debts and seek the assistance of the court in getting a fresh start. Under the protection of the bankruptcy court, debtors may discharge their debts, perhaps by paying a portion of each debt. Bankruptcy judges preside over these proceedings.
• Board : means a Board of a Community College District. See Illinois Compiled Statutes 110 ILCS 805/3B-1
• Building purposes : means the preparation of preliminary drawings and sketches, working drawings and specifications, erection, building acquiring, altering, improving or expanding college facilities, including the acquisition of land therefor, and the inspection and supervision thereof, to be used exclusively for community colleges. See Illinois Compiled Statutes 110 ILCS 805/5-2
• Common law : The legal system that originated in England and is now in use in the United States. It is based on judicial decisions rather than legislative action.
• Dismissal : The dropping of a case by the judge without further consideration or hearing. Source:
• District : means a Community College District. See Illinois Compiled Statutes 110 ILCS 805/3B-1
• Facilities : means classroom buildings and equipment, related structures and utilities necessary or appropriate for the uses of a community college, but not including land or buildings intended primarily for staff housing, dormitories, or for athletic exhibitions, contests or games for which admission charges are to be made to the general public. See Illinois Compiled Statutes 110 ILCS 805/5-2
• Faculty Member : means a full time employee of the District regularly engaged in teaching or academic support services, but excluding supervisors, administrators and clerical employees. See Illinois Compiled Statutes 110 ILCS 805/3B-1
• Fiduciary : A trustee, executor, or administrator.
• Fiscal year : The fiscal year is the accounting period for the government. For the federal government, this begins on October 1 and ends on September 30. The fiscal year is designated by the calendar year in which it ends; for example, fiscal year 2006 begins on October 1, 2005 and ends on September 30, 2006.
• Fraud : Intentional deception resulting in injury to another.
• Grantor : The person who establishes a trust and places property into it.
• Interest rate : The amount paid by a borrower to a lender in exchange for the use of the lender's money for a certain period of time. Interest is paid on loans or on debt instruments, such as notes or bonds, either at regular intervals or as part of a lump sum payment when the issue matures. Source: OCC
• Lawsuit : A legal action started by a plaintiff against a defendant based on a complaint that the defendant failed to perform a legal duty, resulting in harm to the plaintiff.
• Notice : means a written notice delivered in person or deposited in the U. See Illinois Compiled Statutes 110 ILCS 805/3B-1
• Real property : Land, and all immovable fixtures erected on, growing on, or affixed to the land.
• Reporter : Makes a record of court proceedings and prepares a transcript, and also publishes the court's opinions or decisions (in the courts of appeals).
• School Year : means a regular academic year or its equivalent excluding summer school. See Illinois Compiled Statutes 110 ILCS 805/3B-1
• Term : means a term within a school year. See Illinois Compiled Statutes 110 ILCS 805/3B-1
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Illinois Garnishments News: Wage Assignments No Longer Expire in 84 Days

Recently, illinois revised its wage assignment law. this development is important for multistate employers because illinois is the only state with a statute that clearly and unequivocally provides that employers must honor contracts employees make with third parties to assign wages..

Recently, Illinois revised its wage assignment law. This development is important for multistate employers because Illinois is the only state with a statute that clearly and unequivocally provides that employers must honor contracts employees make with third parties to assign wages. Under the Illinois Wage Assignment Act, 740 ILCS §§170/.01 et seq ., there are detailed steps that a creditor must take with an employee for an assignment to be legal and then again with the employer for the assignment to be enforceable against the employer. A highlight of three key changes to the law follows:

• The revised statute eliminated the provision providing that the duration of deductions was only an 84-day period. After this period, the creditor had to restart the “Notice and Demand” process from the beginning in order for the employer to restart wage deductions. Now, under the revised statute, a valid wage assignment lasts until paid, but no longer than three years if the current employer is named on the assignment or two years if the current employer is not the one named on the assignment.
• The revised statute added recognition of Federal Trade Commission (FTC) regulations that require wage assignments derived from credit transactions regulated by the FTC to be revocable at the will of the debtor. Since state laws cannot contradict federal law, this change is academic, but it does provide clarity to all involved parties.
• The revised statute changed some of the statutory verbiage on the required Notice and Demand, including adding an entirely new document called “Understanding Your Choices Under the Illinois Wage Assignment Act.”

Martin C. Brook , a shareholder in the Detroit (Metro) office of Ogletree Deakins, is the author of OD Comply: Garnishments , a comprehensive subscription-based product compiling state law garnishment requirements in concise, user-friendly formats with links to state garnishment forms. OD Comply: Garnishments is updated and provided to  OD Comply subscribers as the law changes.

For further information on garnishment issues and best practices, join Martin for “Garnishments and Other Wage Attachments: Answering, Administering, and Troubleshooting,” a full-day seminar that will take place on April 11, 2017, in Phoenix, Arizona. Register here .

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Wage assignment and employers’ responsibilities

Tough economic times raise some tricky HR issues—for example, when an employee’s financial straits begin to affect his employer.

Must we honor a payday loan wage assignment?

Q. An employee borrowed money from a payday loan service at a very high interest rate that I feel is unfair. The payday loan service sent me a “wage assignment” notice and told me that our company must withhold money from his paychecks.  What is a wage assignment, and does our company actually have to honor it? A. A wage assignment is a document that allows a creditor to attach part of the employee’s wages if the employee fails to pay a specific debt. The creditor does not have to obtain a judgment in a court proceeding before requesting payment. Under the Illinois Wage Assignment Act (740 ILCS 170), private employers are obligated to honor a creditor’s properly served demand for a valid wage assignment, unless an employee presents a timely, valid , written defense to the wage assignment.

What constitutes a valid assignment?

Q. How can I tell if a wage assignment is valid? How long is it valid? A. A valid wage assignment document must have the words “Wage Assignment” printed or written in boldface letters of not less than ¼ inch in height at the head of the wage assignment and one inch above or below the line where the employee signs the assignment. The employee must have signed the document in person, and the document must show the date of execution, the employee’s Social Security number, the name of the employer at the time of execution, the amount of money loaned or the price of the articles sold or other consideration given, the rate of interest or time-price differential to be paid, if any, and the date on which such payments are due. A wage assignment is valid for no more than three years after the employee signs it and the employer’s name appears on it. If the employee changes jobs, the wage assignment is valid for two years, even though the new employer’s name does not appear on the assignment.

Handling wage assignments

Q. How does the wage assignment process start? A. Assuming that the wage assignment document complies with the formal requirements, the creditor must serve “demand to withhold” on the employer. The demand is valid only if:

The employee has defaulted on the debt secured by the assignment for more than 40 days, and the default has continued to the date of the demand.

The demand contains a correct statement of the amount the employee is in default, and the creditor provides an original or a photocopy of the assignment to the employer.

The creditor has served a “notice of intention to make the demand” upon the employee, with a copy to the employer, by registered or certified mail not less than 20 days before serving the demand.

Putting on the brakes

Q. Can an employee stop the wage assignment process? A. The employee does have a right to contest the demand. If an employee has a legal defense to the wage assignment, the employee may—within 20 days after receiving a notice of demand or within five days after the employer is served with the demand—notify the employer, in writing, of any defense to the wage assignment and send a copy of the written defense to the creditor by registered or certified mail.   As a result, the employee’s wages are not subject to a demand served by the creditor unless the employer receives a copy of a subsequent written agreement between the creditor and the employee authorizing such payments. Similarly, if the creditor receives a copy of the defense prior to serving its demand upon the employer, the creditor may not serve the demand upon the employer.  Whether the employee’s defense is legally valid is not an issue the employer must resolve. Instead, the employee and the creditor may attempt to reach another agreement or the creditor may simply bring a separate lawsuit against the employee to collect an outstanding debt. 

Calculating the wage assignment payment

Q. How much must the employer withhold—and when? A. The employer must begin payment to the creditor no sooner than five business days after service of such a demand.  The employer must withhold the lesser of:

15% of weekly gross wages

The amount by which the disposable earnings for a week (pay remaining after federal and state taxes, Social Security deductions and any other amounts required by law to be withheld, including required retirement contributions) exceed 45 times the federal minimum wage, unless a notice of defense is received within that five-day period.

The employer shall be paid a fee of $12 for each wage assignment. That $12 is credited against the debt.

WHAT TO READ NEXT

Illinois Compiled Statutes 740 ILCS 170 Illinois Wage Assignment Act. Section 4.2

    (740 ILCS 170/4.2) (from Ch. 48, par. 39.4b)

    Sec. 4.2.

    If the employee has not given notice of defense as provided in this Act within 20 days after receiving the notice of intention to make a demand, the creditor may proceed with his demand, and the employer shall commence payment to the creditor not sooner than 5 business days after service of such demand, unless a notice of defense is received within that 5 day period. If the employee cures the default stated in the demand, the creditor shall notify the employer and release the demand. No employer shall be liable for payments made in compliance with this Section.

    If a notice of defense is received by an employer within the period specified in Section 4.1, no wages are subject to a demand served by the creditor described in that notice of defense; unless the employer receives a copy of a subsequent written agreement between the creditor and employee authorizing such payments. If such an agreement is not reached, the creditor may not institute further proceedings on the wage assignment. If a notice of defense has been given, service of summons in any subsequent proceeding on the debt for which the wage assignment was given as security may be made by registered or certified mail.

(Source: Laws 1967, p. 2049.)

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Last modified: February 18, 2015

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