How an Employee's Divorce May Affect Your Business

In Re Marriage of Miller

The divorce rate in the United States is high. Approximately forty-three percent (43%) of marriages end in divorce (National Center for Health Statistics). Every day, court rooms in Illinois are dedicated to nothing but divorce cases. There is an obvious long lasting impact that a divorce has on the individuals and family members involved in the break-up. However, that impact has a far reaching effect that may directly involve the employer of a divorcee.

On November 29, 2007, the Illinois Supreme Court issued an opinion in In Re Marriage of Miller, 870 N.E.2d 292, Ill. 2007, which enforced the Illinois Income Withholding for Support Act ("Withholding Act") (750 ILCS 28/35). Miller involved a divorced couple who had one child. Pursuant to their divorce, the husband had to pay a relatively small amount of child support to the child's mother (his wife). In accordance with the child support order a "Notice to Withhold Income" was issued and immediately delivered to the husband's employer. The Notice instructed the husband's employer to deduct $82 from the husband's weekly income and forward the same, within seven business days of the pay date, to the State Disbursement Unit. In Miller, the husband's employer failed to deduct or deliver any amount to the State Disbursement Unit for over three years.

As with every Notice to Withhold Income, the reverse side of the Notice includes the following language: "Liability: if you fail to withhold income as the Notice directs, you are liable for both the accumulated amount you should have withheld from the employee's/obligor's income and any other penalties set by State law. You may be found liable for the total amount which you fail to withhold or pay over and fines up to $100.00 per day for each day after the 7 day grace period." The trial court in Miller followed the strict language of the Withholding Act, calculated the total amount due to the wife plus the $100.00 per day penalty and handed down a judgment against the husband's employer in the amount of $1,172,100.00!

The Appellate Court found the penalty to be unconstitutionally severe and reversed the ruling. However, the Illinois Supreme Court reversed the judgment of the appellate court and affirmed the judgment of the circuit court thereby ordering the husband's employer to pay damages to the ex-wife in the amount of $1,172,100.00. The Illinois Supreme Court looked to the intent of the Withholding Act to determine that the welfare of children is and was the ultimate goal of the statute. Accordingly, strict adherence to all aspects of the Withholding Act is "paramount" and the damages and penalties were not too severe. 870 N.E.2d 292, 300.

The obvious lesson to employers who have received a Notice to Withhold Income is to follow the instructions provided by the state!