MHIC NASCLA Contractors Practice Exam

When is a garnishment likely to occur?

1. When an employee surpasses overtime

2. When an employee has unpaid debts

3. During employee retirement

4. When an employee resigns

The correct answer is: When an employee has unpaid debts

A garnishment is a legal process through which a portion of an employee's earnings is withheld by an employer for the payment of a debt. This typically occurs when a court has issued an order for the employer to pay a certain amount directly to a creditor from the employee’s wages. Unpaid debts create the conditions under which creditors can pursue garnishment to recoup owed amounts. When individuals fail to meet their financial obligations, creditors may seek legal recourse, resulting in garnishment as a means of collection. This process is specifically designed to address situations where individuals have outstanding debts, thus directly linking the occurrence of garnishment to this context. In contrast, while situations involving overtime, retirement, and resignation may influence an employee's pay or benefits, they do not inherently relate to a legal obligation to pay debts. Therefore, these scenarios do not typically lead to garnishment actions as they do not stem from debt-related circumstances.