Employer Liability Categorized Articles

Although courts have described the outcome as “harsh,” a recent ruling shows that a judgment creditor can recover the full amount of an employee’s unpaid debt from an employer if that employer fails to comply with specific garnishment procedures.

A party that prevails in a lawsuit and is awarded damages is known as a judgment creditor. In order to collect on the judgment, Louisiana law allows a judgment creditor to garnish the wages of the judgment debtor, the party cast in judgment. Once a judgment against an employee is obtained, the judgement creditor may issue garnishment interrogatories to the employer requesting information related to the employee’s job, rate of compensation, manner of payment, and whether there are other judgments or garnishments affecting the employee’s compensation.

It is imperative that the employer file sworn answers to all garnishment interrogatories within 30 days from the date of service.^ Louisiana courts treat unsworn answers to interrogatories as a failure to answer,* and an employer’s failure to timely answer garnishment interrogatories can result in costly penalties. In fact, a Louisiana employer can be held liable for the full amount of the employee’s judgment if procedural requirements are not followed.

La. C.C.P. art. 2413(A) states that if the employer fails to answer the garnishment interrogatories within 30 days from the date of service, then the judgment creditor may proceed against the employer for the amount of the unpaid judgment, with interest and costs. La. C.C.P. art. 2413(B) provides that the employer must pay the entire amount of the judgment unless it proves the actual amount it owed to the employee at the trial on the contradictory motion. Regardless of the decision on the contradictory motion, La C.C.P. art. 2413(C) requires the employer to pay the costs and reasonable attorney’s fees of the judgment creditor.

The First Circuit Court of Appeals recently examined these procedures in Tower Credit, Inc. v. Williams.^^ The judgment creditor in the Tower Credit case issued garnishment interrogatories to the judgment debtor’s employer. However, the employer failed to timely respond to garnishment interrogatories. When the judgment creditor filed a Motion for Judgment Pro Confesso against the employer to require it to appear and present evidence regarding the amount of wages it should have withheld after receiving the garnishment interrogatories, the employer failed to appear for the hearing.

Given the employer’s failure to timely respond to the interrogatories and its failure to appear for the hearing, the First Circuit found that the creditor was entitled to a judgment pro confesso against the employer for the entire amount of the employee’s debt. Citing the unique facts of the case, which included evidence that the judgment debtor/employee no longer worked for the employer cast in judgment, the Louisiana Supreme Court recently granted vacated part of the judgment pro confesso and remanded the matter for rehearing.**

However, this case shows that Louisiana courts will enforce La. C.C.P. art. 2413 and cast an employer in judgment for its employee’s debt, even though courts have described the statute’s penalties as “harsh.” Tower Credit shows that employers should respond to garnishment interrogatories within the timeframe provided by law. In the event the deadline is passed, La. C.C.P. art. 2413(B) requires the employer to appear for the judgment pro confesso hearing if it intends to argue it should not be indebted for the judgment. Failure to do both could result in the employer being held liable for the full amount of its employee’s unpaid debt.

References:

^ See La. C.C.P. art. 2412(D).

*See All Star Floor Covering, Inc. v. Stitt, 804 So. 2d 705 (La. Ct. App. 1st Cir. 2001).

^^Tower Credit, Inc. v. Williams, 2022-0106 (La. App. 1 Cir. 9/16/22), 352 So. 3d 1029, writ granted, judgment vacated in part, 2022-01556 (La. 2/7/23), 354 So. 3d 659.

**Tower Credit, Inc. v. Williams, 2022-01556 (La. 2/7/23), 354 So. 3d 659.

In a previous blog, we outlined developing law in the Louisiana appeals courts, and federal district courts in Louisiana on the issue of whether a claimant may maintain a separate cause of action against an employer for independent negligence when it is stipulated that the employee was in the course and scope of employment.¹ Most courts held a claimant could not maintain a separate action against the employer under these circumstances, reasoning that the employee’s fault would impute to the employer, and therefore, additional inquiry was not appropriate. However, the Louisiana Supreme Court recently addressed the issue and stated:

“(A) plaintiff may pursue both a negligence cause of action against an employee for which the employer is vicariously liable and a direct claim against the employer for its own negligence in hiring, supervision, training, and retention as well as a negligent entrustment claim, when the employer stipulates that the employee was in the course and scope of employment at the time of the injury.” (Emphasis added) See Martin v. Thomas et al., 21-1490 (La. 12/21/21), 328 So. 3d 1164.

This holding notably overturned the 1^st Circuit Court of Appeal ruling in Elee v. White, – – So.3d – – (La. App. 1 Cir 7/24/20), 2020 WL 4251974 and other Louisiana 5^th Circuit Court of Appeals decisions. The Supreme Court in Martin reasoned that “the initial assessment of fault required by the law is not bypassed due to the employer-employee relationship” and “shielding a potential tortfeasor from liability is not compatible with a comparative negligence regime.” The Court further stated that the possibility that both the employee and employer may be at fault is not “subsumed” by the employer’s admission on course and scope. In fact, if the fault of the employee is shown, then the issue of whether there is also fault on the part of the employer remains and must be decided by the evidence on a case-by-case basis.

The consequences of this decision remain to be seen, but it is expected that claimants may also pursue employers separately on theories such as negligent hiring, supervision, and entrustment. The scope of such discovery will remain within the sound discretion of the trial judge.

By: John P. Wolff, III and Richard W. Wolff

¹Louisiana Appeal Courts Prohibit Direct Negligence Claims Against Employer; US District Court Uses Rule to Limit Discovery – Keogh Cox