Title: GENESEE COUNTY FRIEND OF COURT V GENERAL MOTORS CORP
Citation: N/A
Docket Number: 115862
State: Michigan
Issuer: Michigan Supreme Court
Date: May 15, 2001

____________________________________________________________________________________________ 
____________________________________________________________________________________________________________________________ 
________________________________ 
________________________________ 
 
Michigan Supreme Court 
Lansing, Michigan 48909 
C hief Justice 
Justices 
Maura D. Corrigan  
Michael F. Cavanagh 
Elizabeth A. Weaver 
Marilyn Kelly 
Clifford W. Taylor 
Robert P. Young, Jr. 
Opinion 
Stephen J. Markman 
FILED MAY 15, 2001  
GENESEE COUNTY FRIEND OF THE  
COURT,  
Petitioner-Appellee,  
v 
No. 115856  
GENERAL MOTORS CORPORATION,  
Respondent-Appellant.  
GENESEE COUNTY FRIEND OF THE  
COURT,  
Petitioner-Appellant,  
v 
No. 115862  
GENERAL MOTORS CORPORATION,  
Respondent-Appellee.  
PER CURIAM  
The issue in this case is whether certain categories of  
payments made by General Motors to its employees constitute  
“earnings” within the meaning of the federal Consumer Credit  
Protection Act (CCPA).  15 USC 1672(a). 
If so, they are  
subject to a limitation on the amount that may be captured by  
income 
withholding 
orders under the Support and Parenting Time  
Enforcement Act.1  The lower courts have held that two types  
of 
payments, 
profit-sharing 
payments 
and 
“recognition 
awards,”  
were not earnings under § 1672(a), but that “signing bonus”  
payments were.  
We conclude that all three categories of payments  
constitute 
earnings 
and are subject to the federal limitations  
on income withholding orders. 
Therefore, we reverse the  
judgments of the Court of Appeals and the circuit court in  
part.  
I  
Statutory Framework  
The Support and Parenting Time Enforcement Act (SPTEA)  
provides for income withholding orders to enforce support  
orders entered in domestic relations and paternity actions.  
The friend of the court is given various responsibilities for  
enforcement of those income withholding orders.  
The act defines “income” as follows:  
(i)  Commissions, earnings, salaries, wages, 
and other income due or to be due in the future to  
an individual from his or her employer and  
successor employers.  
(ii)  A payment due or to be due in the future  
to an individual from a profit-sharing plan, a 
pension plan, an insurance contract, an annuity,  
1 MCL 552.601 et seq.; MSA 25.164(1) et seq.  
2  
 
social 
security, 
unemployment 
compensation, 
supplemental unemployment benefits, or worker’s 
compensation.  
(iii)  An amount of money that is due to an 
individual as a debt of another individual, 
partnership, association, or private or public 
corporation, the United States or a federal agency, 
this state or a political subdivision of this 
state, another state or a political subdivision of 
another state, or another legal entity that is 
indebted to the individual.  [MCL 552.602(j); MSA 
25.164(2)(j)].  
In 
addition, 
the act incorporates federal law with regard  
to the maximum percentage that may be withheld.  MCL 552.608;  
MSA 25.164(8) provides:  
The total amount of income withheld under this  
act under all orders to withhold income for current  
support, past due support, fees, and health care 
coverage premiums effective against a payer shall 
not exceed the maximum amount permitted under 
section 303(b) of title III of the consumer credit 
protection act, Public Law 90-321, 15 USC 1673.  
15 USC 1673(b) sets those limits as follows:  
(2)
 The maximum part of the aggregate 
disposable earnings of an individual for any 
workweek which is subject to garnishment to enforce 
any order for the support of any person shall not 
exceed—  
(A)  where such individual is supporting his 
spouse or dependent child (other than a spouse or 
child with respect to whose support such order is 
used), 
50 
per 
centum 
of 
such 
individual’s  
disposable earnings for that week; and  
(B)  where such individual is not supporting  
such a spouse or dependent child described in 
clause (A), 60 per centum of such individual’s 
disposal earnings for that week;  
except that, with respect to the disposable 
earnings of any individual for any workweek, the 50 
per centum specified in clause (A) shall be deemed 
to be 55 per centum and the 60 per centum specified  
3  
 
in clause (B) shall be deemed to be 65 per centum, 
if and to the extent that such earnings are subject 
to garnishment to enforce a support order with 
respect to a period which is prior to the twelve­
week period which ends with the beginning of such 
workweek.  
Of critical importance to this appeal is 15 USC 1672(a),  
which includes the definition of “earnings”:  
The term “earnings” means compensation paid or 
payable for personal services, whether denominated 
as wages, salary, commission, bonus, or otherwise, 
and includes periodic payments pursuant to a  
pension or retirement program.  
Thus, if the payments in question constitute “earnings”  
under the federal statute, they are subject to the percentage  
limitations in that statute.  If they are not “earnings,” they  
are still “income” under the Michigan statute, and the entire  
amount of the payments may be captured to pay support  
arrearages.  
II  
General Motors’ Payments to Employees  
As noted earlier, three categories of payments are  
involved in this case:  profit-sharing, recognition awards,  
and signing bonuses.  
The GM profit-sharing plan has been part of its  
collective bargaining agreement with the United Auto Workers  
for a number of years.  The agreement establishes a formula by  
which a portion of GM’s profits is allocated to the  
profit-sharing plan. An eligible employee’s profit share is  
determined by a two-part formula.  The profit-sharing rate per  
4  
 
hour 
is 
determined 
by dividing the total profit-sharing amount  
by the total eligible compensated hours for all eligible  
employees. Second, an individual employee’s profit share is  
calculated by multiplying the profit-sharing rate per hour by  
the individual employee’s eligible compensated hours up to a  
maximum of 1,850 hours per year.  Payment is made once a year  
in the employee’s regular payroll check.  
The second type of payment was a December 1996 “signing  
bonus.”  As a result of the collective bargaining negotiations  
between GM and the UAW in the fall of 1996, GM agreed to  
provide a payment of $2,000 to each eligible employee.  Under  
that 
agreement, 
each 
eligible employee would receive a payment  
of $2,000 in the employee’s regular payroll check in December  
1996.  During subsequent years of the agreement, employees  
were to receive a three percent general increase in their base  
wages.  
The third category was the June 1997 “recognition award”  
payments that GM made to certain salaried employees.  An  
affidavit submitted by GM established that under its  
compensation program GM created a single fund from which both  
base salary increases and the recognition award payments were  
made.
 The various compensation planning units at GM  
determined the appropriate mix between base salary increases  
and the recognition awards for their eligible employees. In  
doing so, a market rate salary administration system was used  
to determine comparable salaries for various job positions in  
5  
 
 
the industry. All other factors being equal, employees with  
salaries below the market rate would normally receive larger  
increases in their base pay to bring their compensation level  
closer to the market rate.  Employees with salaries above the  
market 
rate 
would 
normally receive smaller base rate increases  
since their current pay is already high in relationship to the  
market.  Under market rate salary administration, recognition  
awards are a separate element of pay considered independently  
from base salary increases. A significant recognition award  
might be appropriate for an employee who will not receive a  
base salary increase because the employee’s salary is already  
well placed in the salary range.  
III  
Circuit Court Proceedings  
In late January 1996, GM notified the Genesee friend of  
the court (and similar agencies elsewhere) that the profit  
sharing payments would be made on about March 15, 1996.  As a  
result, the friend of the court obtained from six of the seven  
Genesee circuit judges2 amended income withholding orders  
directing GM to withhold from each of the listed employees’  
checks the amount corresponding to the arrearage listed.3  
2 
 The friend of the court represents that one of the 
circuit judges had historically refused to issue such amended 
support orders, and the friend of the court did not make the 
request of that judge.  
3 The orders signed by each judge were entitled “In the 
Matter of General Motors Employees Lump-Sum Profit Sharing 
Payment,” and were accompanied by lists of GM employees who  
6  
  
 
Upon 
receipt 
of 
the amended income withholding orders, GM  
deducted from the employees’ payments amounts required to be  
withheld by law such as taxes and social security withholding.  
Believing that these payments were subject to the federal  
percentage limits on garnishment, GM paid to the friend of the  
court fifty percent of the remaining disposable earnings.4  
A similar procedure was followed regarding the signing  
bonus payments.  GM notified the friend of the court in  
November 1996 that such payments would be made in mid-December  
1996.  Orders were entered by the various circuit judges about  
November 20, 1996, directing withholding from the special  
payment checks the amounts of the arrearages listed.  As with  
the 
profit-sharing 
payments, GM withheld only fifty percent of  
disposable earnings.  
There were apparently discussions between the parties  
about the dispute.  When they were unable to resolve their  
differences, the friend of the court filed a petition with one  
of the circuit judges, the Honorable Judith A. Fullerton,  
seeking enforcement of the February and November 1996 amended  
income withholding orders.  Judge Fullerton issued an order to  
show cause directed to GM on February 4, 1997. GM responded  
to the order to show cause, arguing that the two categories of  
were in arrears on payments in cases assigned to that judge.  
4 
 As the quotation from the statute set forth earlier 
indicates, the actual percentage limits are a bit more 
complicated, but the details are not important for the 
purposes of this appeal.  
7  
 
payments were “earnings” under the CCPA, and thus subject to  
its limits on the amounts that may be withheld for support  
orders.  
There was a hearing on May 5, 1997.  Judge Fullerton  
ruled that the profit-sharing payments were not “earnings” as  
that term is used in the CCPA, and thus the percentage  
limitations did not apply.  However, she concluded that the  
signing bonuses did constitute “earnings” under the federal  
statute, 
and 
therefore GM properly withheld only fifty percent  
of such payments.  
At about the same time, the friend of the court became  
aware of the pending recognition award payments, to be made  
about June 13, 1997, and obtained additional amended income  
withholding orders in early May 1997.  On May 22, 1997, GM  
notified the friend of the court that recognition awards were  
being made to certain employees who were listed on the amended  
withholding orders, and that GM was withholding fifty percent  
of the disposable income of those employees pursuant to the  
order.  
At the request of the friend of the court, Judge  
Fullerton issued a June 10, 1997, order enjoining GM from  
distributing any portion of the recognition award payments to  
be made June 13, 1997, and later issued an order to show cause  
why one hundred percent of the recognition awards were not  
paid to the friend of the court.  A hearing was held on  
August 11, 1997, and Judge Fullerton ruled that the  
8  
 
recognition award payments were not earnings, and therefore  
were not protected by the CCPA percentage limitations on  
support 
collections. 
GM 
had 
filed 
a 
motion 
for  
reconsideration of the May 5 decision regarding the profit­
sharing payments.  It was denied at the 
same August 11  
hearing.  On August 27, 1997, Judge Fullerton entered an order  
incorporating both the denial of reconsideration of the  
decision on the profit-sharing payments and the ruling that  
the recognition awards were not “earnings.”  
GM filed a claim of appeal in the Court of Appeals, and  
the friend of the court cross-appealed.  
IV  
Court of Appeals Decision  
The Court of Appeals noted that the three payments in  
issue fall within the SPTEA’s broad definition of “income.”  
Thus, the panel held, the circuit court properly issued income  
support orders with respect to the payments.  However, that  
left the question of the effect of the federal statute.  After  
reviewing the statutory language, the Court examined the  
United States Supreme Court’s discussion of the meaning of  
“earnings” in Kokoszka v Belford, 417 US 642, 651; 94 S Ct  
2431; 41 L Ed 2d 374 (1974).  In that case, the Court  
determined that an income tax refund did not constitute  
earnings under the CCPA.  The Court explained that earnings  
are “limited to ‘periodic payment of compensation and [do] not  
pertain to every asset that is traceable in some way to such  
9  
 
 
 
compensation.’”  417 US 651. The U.S. Supreme Court saw this  
interpretation as supported by the legislative history of the  
federal act:  
There is every indication that Congress, in an 
effort to avoid the necessity of bankruptcy, sought 
to regulate garnishment in its usual sense as a 
levy on periodic payments of compensation needed to 
support the wage earner and his family on a 
week-to-week, month-to-month basis. [Id.]  
The Court of Appeals first examined the profit-sharing  
payments, finding them not to be earnings. It explained:  
The payments were not discretionary in that, 
if respondent made a profit, the payments were 
required to be made. However, because the payments 
depended on respondent’s profits, the employees 
could not depend on receiving a certain amount, or 
any amount at all. Accordingly, an employee could 
not depend on the profit-sharing payment to meet 
basic needs on a week-to-week, month-to-month  
basis.  Thus, because allowing garnishment of the 
entire amount of the profit-sharing payments would 
not place the type of hardship on the employees 
that the CCPA seeks to avoid, Funk v Utah State Tax  
Comm, 839 P2d 818, 821 (1992), we conclude that the 
profit-sharing payments were not “earnings” for the 
purposes of the CCPA. [238 Mich App 352, 358; 605 
NW2d 349 (1999).]  
The Court of Appeals offered similar reasoning regarding  
the recognition awards, finding them not to constitute  
earnings:  
The recognition awards were discretionary 
lump-sum 
payments 
made 
to 
certain 
salaried  
employees.  The awards were intended to recognize 
an employee’s past contributions and to encourage 
future efforts. 
No employee was guaranteed a 
recognition award.  The employees that received a 
recognition award did not know the amount of the 
award 
in 
advance. 
Therefore, 
like 
the  
profit-sharing payments, the employees could not 
have relied on the awards to support themselves or 
their families on a week-to-week, month-to-month  
10  
 
basis. [238 Mich App 358-359.]  
However, the Court of Appeals found that the signing  
bonuses were earnings.  It noted that the use of the term  
“bonus” was of little significance, and that one should look  
at the actual substance of the payment rather than the label.  
Gerry Elson Agency, Inc v Muck, 509 SW2d 750, 753 (Mo App,  
1974).  In the Court’s view, other facts indicated that the  
payments were earnings:  
The $2,000 payments were not discretionary,  
but were required to be made pursuant to a  
collective bargaining agreement. 
Unlike the  
profit-sharing payments and the recognition awards, 
it was certain that the employees would receive the 
bonuses pursuant to the collective bargaining 
agreement, and the amount of the bonuses was set. 
Furthermore, although the payments were made in a 
lump sum, they were part of a three-year increase 
in the employees’ base wage. Thus, we believe the 
payments were the type the CCPA sought to protect. 
[38 Mich App 359.]  
GM and the friend of the court have filed separate  
applications for leave to appeal.5  
V  
Standard of Review  
This 
case 
involves 
a 
question 
of 
statutory  
interpretation, which we review de novo.  Brown v Michigan  
Health Care Corp, 463 Mich 368, 374; 617 NW2d 301 (2000);  
Sands Appliance Services, Inc v Wilson, 463 Mich 231, 238; 615  
NW2d 241 (2000).  
5 The Michigan Manufacturers Association filed a motion 
for leave to file a brief as amicus curiae in support of GM’s 
application. That motion is granted.  
11  
VI  
Are Payments “Earnings”?  
There is no dispute that the three categories of payments  
constitute “income” for the purpose of the Michigan statute,  
making them subject to income withholding orders to enforce  
support obligations.  The only question is whether the  
payments are “earnings” under the federal CCPA and thus are  
subject to its limitations on the maximum amount that may be  
reached to enforce the support obligations.  
In finding that the profit-sharing and recognition award  
payments did not constitute “earnings,” the Court of Appeals  
focused on the facts that the payments were made as lump sums  
and that the amounts were uncertain, making it difficult for  
employees to depend on them to meet basic needs week to week  
and month to month.6  However, this reasoning is inconsistent  
with the plain language of 15 USC 1672(a):  
The term “earnings” means compensation paid or 
payable for personal services, whether denominated 
as wages, salary, commission, bonus, or otherwise, 
and includes periodic payments pursuant to a  
pension or retirement program.  
The reference to periodic payments does not apply to the  
definition as a whole. Periodic payments are only mentioned  
in connection with pension or retirement programs, presumably  
to distinguish such payments from lump sum distributions from  
6 
 With regard to the recognition awards, the Court of 
Appeals also noted that the payments were made at the 
discretion of the employer.  
12  
 
pension or retirement plans.  The inclusion of “bonus” in the  
definition of earnings clearly negates the suggestion that  
periodic 
payment 
is 
required.  Bonuses are typically sporadic,  
irregular, unpredictable, and discretionary payments by the  
employer.
 See, e.g., Hunt v City of Markham, 219 F3d 649,  
654 (CA 7, 2000); Perri v Perri, 682 NE2d 579, 580 (Ind App,  
1991).7  
The Court of Appeals failed to focus on the general  
definition—earnings are “compensation paid or payable for  
personal services.”  
GM’s description of the payments in  
question 
was 
undisputed.  The profit-sharing payments for many  
years had been a part of the collective bargaining agreement  
with the labor union representing GM hourly employees.  The  
affidavit submitted by GM explaining the nature of the  
recognition award payments makes clear that the fund from  
which such payments are made is a regular part of GM’s  
7 The Court of Appeals reliance on language in Kokoszka,  
supra, is misplaced. 
In that decision the Court was  
principally concerned with the interaction between the  
Consumer Credit Protection Act and the bankruptcy laws. The  
Court held that the CCPA’s limitations on wage garnishment do 
not restrict the right of a trustee in bankruptcy to treat the 
income tax refund as property of the bankrupt’s estate. The  
discussion about periodic payments is not an analysis of the 
language of the statute, but rather of the general legislative 
purposes behind the CCPA.  As demonstrated below, the plain 
language of the statute establishes that these payments are 
“earnings,” whether or not they are made as periodic payments. 
The language of Kokoszka is not on point and unnecessary to 
the resolution of that case.  Absent clear contrary precedent,  
our interpretation of the CCPA is to be guided by the 
statute’s unambiguous language.  
13  
 
  
  
compensation scheme for salaried employees.  The choice  
between making recognition award payments and awarding raises  
was based on a variety of competitive factors involving  
employee pay levels and pay scales in comparable industries,  
but the payments are unquestionably compensation for personal  
services.8  
The fact that the amounts of the payments are not known  
in advance and, in the case of the recognition awards, are  
subject to the discretion of management, does not change the  
character of the payments.  The statutory definition of  
“earnings” specifically includes commissions and bonuses,  
which are similarly less predictable than hourly or weekly  
wages or salaries and, in the case of bonuses, are subject to  
management discretion.9  
8 There are relatively few cases interpreting the federal 
statute.  However, they illustrate that the question is 
whether the payment is compensation for services.  Compare 
Kokoszka v Belford, supra (income tax refund did not  
constitute 
earnings), 
and 
Pallante 
v 
Int’l 
Venture  
Investments, Ltd, 622 F Supp 667 (ND Ohio, 1985) (severance 
pay not earnings), with East Hartford Bd of Ed v Booth, 232 
Conn 216; 654 A2d 717 (1995) (accrued sick leave and deferred 
compensation 
are 
“earnings,” 
under 
Connecticut 
statute 
similar 
to federal CCPA), and Riley v Kessler, 2 Ohio Misc 2d 4; 441 
NE2d 638 (1982) (vacation pay constitutes “earnings”).  One  
unpublished decision of the Ohio Court of Appeals has held 
that profit-sharing payments constitute earnings under  
§ 1672(a). Ighnat v Ighnat, 1989 WL 34733.  
9 In addition, the Court of Appeals drew an unwarranted 
distinction when it treated the signing bonuses differently 
from the profit-sharing payments.  The Court distinguished 
signing 
bonuses 
on 
the 
ground 
that 
they 
were 
not  
discretionary. 
 
However, 
the 
profit-sharing 
payments 
also 
were 
not discretionary.  If GM had a profit, the employees were  
14  
 
 
 
 
Thus, we conclude that all three categories of payments  
constitute “earnings” under 15 USC 1672(a).  We therefore  
reverse the judgments of the Court of Appeals and the Genesee  
Circuit Court in part, and remand this case to the circuit  
court for further proceedings consistent with this opinion.  
CORRIGAN, C.J., and CAVANAGH, WEAVER, 
KELLY, TAYLOR, 
YOUNG, 
and  
MARKMAN, JJ., concurred.  
entitled to the payments under the collective bargaining 
agreement.  
15