Opinion ID: 849275
Heading Depth: 1
Heading Rank: 6

Heading: Are Payments Earnings?

Text: 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 U.S.C. 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 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 F.3d 649, 654 (C.A.7, 2000); Perri v. Perri, 682 N.E.2d 579, 580 (Ind. App., 1997). [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 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 paymentsare 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] Thus, we conclude that all three categories of payments constitute earnings under 15 U.S.C. 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.