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Legal Memorandum: Assignment of a Claim for Wages in AZ

Issue: Is a security interest in an assignment of a claim for wages or salaries valid under Arizona law?

Area of Law: Employee Law
Keywords: Assignment of a claim for wages or salaries; Security interest; Writ of garnishment for earnings
Jurisdiction: Arizona
Cited Cases: 598 P.2d 108; 123 Ariz. 130; 166 P.2d 943
Cited Statutes: Restatement, Second, Contracts § 321(1); A.R.S. § 12-1598.14, § 12-1598.03(2); Ariz. Rev. Stat. Ann. §§ 44-1001 to -1010
Date: 10/01/2009

9A Arizona Practice, Business Law Deskbook § 36:18 (current through 2009 Update)

In the absence of a statute regulating the assignment of wages or salaries, the “general rule” is that private individuals may assign wages or salary to be earned in the future under an employment contract existing at the time of assignment.[FN1] In addition, the right to receive money due or to become due under a contract may be assigned, even though the contract itself may not be assigned.[FN2]

 

The execution of such an assignment would appear to grant the assignee priority over a subsequent writ of garnishment for earnings.[FN3] This probable outcome is notable because before applying for a writ of garnishment for earnings, a judgment creditor must make demand on the debtor for payment of the amount adjudged due.[FN4] If the judgment debtor agrees to this demand and pays the non-exempt portion of his earnings to the judgment creditor, the judgment creditor can protect the prior right to these earnings against a subsequent writ of garnishment for earnings through an assignment of wages.    

 

[FN1] 6A C.J.S., Assignments § 24 (1978), Restatement, Second, Contracts § 321(1) and see Commercial Life Ins. Co. v. Wright, 64 Ariz. 129, 166 P.2d 943 (1946).

[FN2] 6A C.J.S., Assignments § 24 (1978), Restatement, Second, Contracts § 321(1) and see Commercial Life Ins. Co. v. Wright, 64 Ariz. 129,