1.   General Procedure: What Is It and What Purpose Does It Serve?

Under Texas law, the remedy of garnishment is a proceeding whereby the property or money of a debtor in the possession of a third party (the garnishee: e.g., an employer of the debtor) is applied to the payment of the debt owed to a creditor-garnishor.  The party seeking to utilize this form of remedy must obtain a court order requiring garnishment by the person or entity to whom the order is directed.  This order is known as a writ of garnishment. 

When a plaintiff obtains a judgment against a defendant, and the defendant fails to pay that judgment, the plaintiff may be able to utilize the remedy of garnishment in order to satisfy that judgment.  He or she will file an application for a writ of garnishment supported by affidavits stating the grounds for issuing the writ and the specific facts relied upon by such individual to warrant a finding of garnishment.

Once a court issues a writ of garnishment, it is delivered to the garnishee.  The garnishee must answer, under oath, in writing and signed by him, true answers to the matters inquired of in the writ.  If the garnishee does not file an answer to the writ of garnishment at or before the time directed in the writ, the court may enter judgment by default against the garnishee for the full amount of the judgment against the defendant, together with all interest and costs that may have been accrued in the underlying debt case and in the garnishment proceedings.  For example, in Texas a garnishee who failed to timely object to the court's jurisdiction to issue the writ of garnishment lost the ability to later make that objection because the garnishee failed to properly challenge the trial court's jurisdiction when the writ of garnishment was originally issued.  The garnishee could also be ordered to pay the plaintiff/garnishor actual and exemplary damages for violating the garnishment order.

 A garnishee may subjects itself to liability if it transfers any of the money owed to the defendant as current wages, without first accounting for the amount to be garnished, after it has been served with the garnishment order and during the pendency of the suit.  This occurs because a writ of garnishment not only impounds the funds held by the garnishee when the writ is served, but also the funds belonging to the debtor up to and including the day the garnishee is required to file its answer 

If the garnishee answers that it is not indebted to the defendant in any amount, the plaintiff can, if not satisfied with the answer of the garnishee, controvert the garnishee's answer by stating in an affidavit, among other things, that "he has good reason to believe, and does believe, that the answer of the garnishee is incorrect ."  The court may consider entering a judgment discharging the garnishee from the garnishment proceedings if it appears from the answer of the garnishee that he is not indebted to the defendant, and was not so indebted when the writ of garnishment was served upon him.

2.   Wages vs. Salary: Current Wages for Personal Services Exemption

Unless other state or federal aw applies, current wages for personal services are not subject to garnishment.  The term "current wages" indicates that the wages to be seized are those that have not yet been paid to the wage earner or those not yet under his/her control.  Thus, once wages are paid to the employee they are no longer "current wages," and not protected under the exemption laws.  Texas does not place monetary limitations on the current wages exemption, while some other states do.

The term "current wages" implies an employer-employee relationship.  Thus, an independent contractor, such as an attorney engaged in private practice, does not receive "current wages" from a client.  As such, fees for services are not exempt from garnishment where the contracted party was not hired for services for a specified time period to be paid at the expiration of the time hired in proportion to the business done.  For example, if a person hires an attorney to represent her in a particular matter, the fee paid to that attorney is not considered current wages; however, if a corporation hires an attorney as in-house counsel and pays the attorney a salary, as with any other employee, that salary is considered "current wages."

"Current wages" includes compensation paid periodically, or as the services are rendered or as the work performed progresses.  For example, bonuses or commissions payable to sales representatives at the end of the year, in addition to regular salary, are exempt as current wages for personal services.  Generally, however, Texas courts do not specifically make a distinction between personal services and non-personal services.  Whether compensation is for personal services does not turn on how the employer denominates the compensation, i.e., as "wages" or "salary."

The purpose of the current wages exemption from garnishment is to defray the expenses of living.  Exemption laws balance the interests between a debtor and a creditor, and, at least in Texas, tend to favor the debtor.  The exemption, however, remains subject to an exception for the enforcement of court-ordered child support payments and periodic spousal maintenance obligations.

3.   Employee vs. Independent Contractor

Compensation due to an independent contractor, rather than to an employee, is not exempt from garnishment under the current wages exemption.  Generally, whether an employer-employee relationship exists depends on the employer's contractual right of control over the details of the employee's work.  Some factors relevant in determining whether a worker is an employee or an independent contractor include:

An independent contractor is generally one who undertakes to work for an employer and chooses the method of performing the work, without submitting to the employer's control of the details.

4.   Administrative Fee for Certain Costs Incurred by Employers

In Texas, if an employer is required by state or federal aw to deduct from the current wages of an employee an amount garnished under a valid order it may also deduct monthly a nominal administrative fee from the employee's earnings.  In determining the amount of administrative fee that may be deducted, the employer must choose the lesser of (1) the actual administrative cost incurred in complying with the holding order or (2) $10.00.  The administrative fee to be deducted may not exceed that chosen amount.

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