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, v...(register to read more)