In Joseph Silence v. Shane T. Betts No. 1 CA-CV 23-0178, the Arizona Court of Appeals affirmed Maricopa County’s Superior Court’s decision and clarified how Proposition 209’s Savings Clause applies to garnished wages before the effective date of Proposition 209.
The Takeaways
The court clarified how Proposition 209 affects ongoing wage garnishments that were vested prior to the Proposition’s effective date of December 5, 2022. Garnishments on wages earned before Dec. 5, 2022, can be calculated at an amount no more than 25% of nonexempt earnings. However, garnishments on wages earned after that date are calculated at an amount no more than 10% nonexempt earnings.
Mere passage of Proposition 209 does not provide relief for valid judgment debt.
There is no claw back if there was a valid judgment that was being garnished prior to Dec. 5, 2022. Judgment creditors did not have to return the differential to the debtors between original rate of 25% rate and the post-Proposition 209 rate of 10% on non-exempt earnings.
The Facts
In 2020, Silence obtained a judgment against Betts, which was then appealed. In 2021 the Appellate Court affirmed the judgment. A writ of garnishment was issued ordering Bett’s employer to turn over nonexempt earnings to Silence and issued a continuing lien. The employer complied.
In November 2022, Arizona voters passed Proposition 209, which generally increased the amount of wage exemptions to which judgment debtors are entitled to from 25% to 10%. The effective date was December 5, 2022. Proposition 209 included a savings clause, which has been the subject of much debate and litigation. It states:
“This act applies prospectively only. Accordingly, it does not affect rights and duties that matured before the effective date of this act, contracts entered into before the effective date of this act, or the interest rate on judgments that are based on written agreement entered into before the effective date of this act.”
Betts’ judgment was not fully paid by December 5, 2022, so his employer continued to withhold his non-exempt wages at the lower rate of 10% of his non-exempt earnings. Because the garnishment remained in effect after December 5, 2022, Betts argued that Silence was required to return the differential to him. In other words, any wages garnished above and beyond 10% of his non-exempt earnings should be paid back to him even if those earnings were before December 5, 2022. The Court disagreed.
The Resolution
The Court clarified Proposition 209 application for employers, debtors, and creditors.
