MacKey v. Lanier Collection Agency & Service, Inc.

1988-06-17

Headline: Court affirms that Georgia’s antigarnishment law for ERISA welfare benefits is overridden by federal law, while allowing creditors to use state garnishment procedures to collect workers’ welfare-plan benefits.

Holding: The Court held that Georgia’s antigarnishment statute that singled out ERISA plans is pre-empted by ERISA, but ERISA does not generally bar state-law garnishment of ERISA welfare-plan benefits.

Real World Impact:

Allows creditors to garnish welfare-plan benefits to collect judgments against participants.
Strikes down Georgia law that uniquely shielded ERISA-plan benefits from garnishment.
Leaves standard state garnishment procedures available to enforce money judgments against plans.

Topics: garnishment of benefits, employee benefit plans, federal law vs state law, debt collection

Summary

Background

The case involves trustees of a multiemployer plan that pays vacation and holiday benefits to workers and a collection agency that won money judgments against 23 plan participants. The agency tried to garnish those participants’ plan benefits under Georgia garnishment rules. A Georgia statute, Ga. Code Ann. § 18-4-22.1, had said ERISA-covered plan benefits could not be garnished, but the Georgia Supreme Court found that state law was overridden by the federal ERISA statute and allowed the garnishment.

Reasoning

The Court asked whether ERISA’s broad pre-emption clause (which makes federal law override state laws that “relate to” employee benefit plans) invalidated Georgia’s antigarnishment rule and whether ERISA more generally bans garnishment of welfare-plan benefits. The Court held that the Georgia statute that singled out ERISA plans is pre-empted (federal law overrides state laws that specifically refer to ERISA plans). At the same time, the Court said ERISA does not generally forbid state garnishment procedures for ERISA welfare benefit plans, noting Congress expressly protected pension benefits in a separate provision but did not extend that protection to welfare benefits.

Real world impact

As a result, state courts and creditors can use ordinary state garnishment processes to collect judgments from welfare-plan benefits, but states may not adopt special rules that uniquely shield ERISA plans. The ruling leaves pension-plan anti-alienation rules and the 1984 congressional changes for domestic-relations orders intact and does not alter those specific protections.

Dissents or concurrances

Four Justices dissented, arguing garnishment laws place substantial burdens on plans and that ERISA’s pre-emption should bar such state procedures; they emphasized congressional choices showing limited exceptions.