Ignoring Income Withholding Order Results In $53,400 In Penalties


 

Failure to follow an income withholding order brings a steep price for an Illinois employer following the divorce of one of its employees. A recent appeal came down from the Circuit Court of Sangamon County called In Re the Marriage of Sally Kay Hundley filed by the former wife and against her ex-husband John and his employer, Buckhart Sand & Gravel. The wife filed a third party claim against her husband’s employer for not paying monthly maintenance according to the income withholding notice.

Case Background

John was ordered to pay $370.00 a month in maintenance after the parties’ trial. Sally served an income withholding notice to John’s employer. The employer, Buckhart Sand & Gravel began withholding income from John’s paychecks but did not pay those withholdings to the Illinois State Disbursement Unit (SDU). Sally complained and filed a third-party complaint against Buckhart. Buckhart complained that the notice wasn’t properly filled out and the court agreed. That appeal was earlier reversed by the Appellate court.

The case went back to the trial court for further proceedings. Buckhart continued to argue that the withholding notice was invalid, but the trial court said that they were not the proper person to contest the validity of the order. Instead of just paying the money, the company continued to fight.

The court issued a written order finding that the initial failure to pay over withheld amounts pursuant to the withholding notice was an innocent mistake, but the violation became “knowing” when Buckhart failed to correct the mistake until May 2016. The company was assessed a statutory penalty in the amount of $112,000. In May 2018, the trial court modified its judgment and reduced the penalty to $53,400.

Illinois Law Provides Daily Penalty When an Income Withholding Order is Ignored

When a company is served with a notice of an income withholding order and they fail to take the money from the obligor’s check, there is an Illinois statute that allows a person to get a statutory penalty of $100 per day for each payment they miss. What is interesting about this case, is that the company took the money from John’s check, but then they wouldn’t pay it out. They paid a lot in attorney’s fees I assume and then to top it off, they are assessed the $100 a day penalty. It wasn’t even their money, so why did they mess around? 

Buckhart argued at one point that it had a “computing error” and that caused them not to pay the money over to the SDU. They argued that they shouldn’t have to pay the penalty because it was an honest mistake. But once they realize the mistake, they still didn’t pay. Instead, after the first appeal, the case goes to trial.

In January 2018, the trial court conducted a bench trial. The parties stipulated that:
  1. Buckhart received an income withholding notice requiring it to withhold $370 per month from John’s pay beginning January 1, 2016,
  2. John was employed by Buckhart and paid weekly at all relevant times, and
  3. Buckhart withheld the amounts required from each paycheck but failed to pay the amounts to the SDU until May 2016.
As a result, Buckhart agreed Sally was entitled to the statutory presumption that the violation was knowing.

Company Admits to Not Taking Action on the Notice to Withhold Income

A representative of the company, Mr. Flatt admitted he received the notice on February 19, 2016, but took no action, and Buckhart did not offer any explanation for why it did not correct the error. Accordingly, the court concluded that although the initial violation was not committed knowingly, the violation became knowing “when the error went unresolved until May of 2016.” The court also found Buckhart violated section 45(j) of the Support Act by failing to respond to the nonreceipt notice or remit the required payments. Based on these violations, the trial court then calculated the $100 per day penalty as set forth in section 35(a).

Employers Beware: Notice to Withhold Income Requires Strict Compliance

When filling out the Notice to Withhold income form, the mandatory language employed by section 20(c) means there must be strict compliance and the failure to include any of the required information (except the obligee’s signature) affects the validity of the notice of withholding. Once you have your Uniform order of support, and you want the money to come from the obligor’s check directly, you would also serve the employer with the Notice to Withhold.

The employer in this case just doesn’t use sound judgment. A payor has no interest in the funds and should not be making a legal determination as to the validity of the conditions giving rise to the withholding. It is for this reason that the Act gives immunity to any payor who complies with a withholding notice. The Act specifically contemplates that withholding notices may contain mistakes about the current amount due or even arrearages, but it is not the employer’s job to second guess the notice or to do anything besides comply. If they believe an error was made, they could always petition the court, but what they cannot do is keep the money after they’ve withheld it.

THIS ARTICLE WAS PREVIOUSLY PUBLISHED AT: https://illinoislawforyou.com/support/ignoring-income-withholding-order-pay-penalties/

Comments

Post a Comment

Popular posts from this blog

When Divorced Parents Disagree About the COVID-19 Vaccine 

Image
  There is a lot of disagreement about vaccinations for children and the argument between parents with differing views on this subject is not a new one.  Illinois family law attorneys representing parents in this type of disagreement have worked throughout the years to avoid the problem in its entirety by addressing the issue of vaccination in the parenting agreement, now called an Allocation Judgment.  A prior agreement on how to handle vaccinations will give clarity as parents deal with the COVID-19 vaccine.   COVID-19 Vaccine Questions from Divorced Parents There are a number of questions and co-parenting issues surrounding the COVID-19 vaccine. Here are five of the most frequently asked questions we are seeing in our Chicago family law practice: 1. What If the Other Parent Will Not Get the COVID-19 Vaccine? We just saw a judge in Cook County strip a mother of her parenting time because she had not received the COVID-19 vaccine.  The parents were before...
Read more

Illinois Law Update – Can a Guardian Ad Litem Speak to a Therapist in My Case?

Image
The Illinois Marriage and Dissolution of Marriage Act in recent years gave the courts in Illinois the authority to order therapy for a minor child, family counseling for one or more of the parties and the child, or parental education for one or more of the parties if it finds that the parents or all parties agree, that the child’s physical health is endangered or that the child’s emotional development is impaired, or that an abuse of allocated parenting time has occurred, or, one or both of the parties violated the judgment with regard to conduct affecting or in the presence of the minor child.  {See 750 ILCS 5/607.6 regarding same}.  However, the same statute previously explicitly indicated that all therapy would be confidential. As of August 13, 2021, Illinois enacted Public Act 102-349, and the statute is now modified.  It no longer has a provision stating that therapy would be strictly confidential.  This kept all information obtained by a Guardian Ad Litem fro...
Read more

Changes to the Illinois Child Relocation Statute in Family Law for 2022

Image
  Oftentimes while a family law case is pending, parents will need or want to move with their minor children . The child relocation law in Illinois as of 2021 indicated that you need to seek approval for relocation from the Court if you want to move your minor child(ren) more than 25 miles away from their current residence. However, under the Illinois statute, as written in 2021, it indicates that “a parent who has been allocated a majority of parenting time or either parent who has been allocated equal parenting time may seek to relocate with a child.”  Judges and attorneys have interpreted this section to mean that until a parenting time schedule is in place, a parent cannot seek relocation, because it is unknown if that parent has the “majority” of parenting time or “equal” parenting time, until, at a minimum, there is a parenting time schedule in a custody order.  New Temporary Child Relocation Law Many Judges have also been interpreting the child relocation law to ...
Read more