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Legal Memorandum: Assignment of a Claim for Wages

Issue: Is a security interest in an assignment of a claim for wages, salary or other compensation covered under UCC  9-109?

Area of Law: Employee Law, UCC & Secured Transactions
Keywords: Assignment of a claim; Security interest; Wages, salary or other compensation
Jurisdiction: Arizona
Cited Cases: None
Cited Statutes: Ariz. Rev. Stat. Ann. § 47-9109(D)(3); UCC § 9-109(d)(3) cmt. 11; 16 C.F.R. Part 444;
Date: 10/01/2009

Ariz. Rev. Stat. Ann. § 47-9109(D)(3) (2005) (“This chapter does not apply to . . . [a]n assignment of a claim for wages, salary or other compensation of an employee.”)

UCC § 9-109(d)(3) cmt. 11 (appended to Arizona’s § 47-9109). 

            11.  Wage and Similar Claims.  As under former section 9-104(d), subsection (d)(3) excludes assignments of claims for wages and the like from this Article.  These assignments present important social issues that other law addresses.  The Federal Trade Commission has ruled that, with some exceptions, the taking of an assignment of wages or other earnings is an unfair act or practice under the Federal Trade Commission Act.  See 16 C.F.R. Part 444.  State statutes also may regulate such assignments.

 

1 Peter F. Coogan et al., Secured Transactions Under the Uniform Commercial Code § 3.11 (addressing exclusion of wage assignments from coverage of article 9).

1C Peter F. Coogan et al., Secured Transactions Under the Uniform Commercial Code § 20.07 (same topic).

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