State and Federal Update: TDR, Workers’ Comp, and Garnishments

The Leagues are advocating for credit unions around the clock with members of Congress, such as Rep. Brad Sherman (D-CA), and many others during the current COVID-19 crisis.
The Leagues are advocating for credit unions around the clock with members of Congress, such as Rep. Brad Sherman (D-CA), and many others during the current COVID-19 crisis.

The California Credit Union League sent a letter to House Financial Services Committee Chairwoman Maxine Waters this past week outlining the League’s priorities for the next Coronavirus relief package. The House is assembling its package even though it is technically out of session.

The League’s main priority is an extension of Section 4013 of The CARES Act (H.R. 748 — Public Law 116-136), addressing Trouble Debt Restructuring (TDR). Delaying the impairment would allow a credit union to give consumers ample time to repay their financial obligations. The League is recommending at least six months after the current expiration.

The League also supported the relevant sections of National Credit Union Administration (NCUA) Chairman Rodney Hood’s letter to Senate Banking Committee Chairman Mike Crapo, addressing capital, liquidity, and services to ensure consumers who have fallen on the hardest of times are not unfairly penalized.

CA Governor Extends Worker Compensation Eligibility
California Gov. Gavin Newsom has signed Executive Order N-62-20, which would extend workers’ compensation eligibility for workers who contract COVID-19 when working outside the home. It will be a rebuttable presumption, meaning it is assumed that employees are infected on the job unless an employer can show otherwise.

Those eligible will have to test positive for COVID-19 by a physician or be diagnosed and confirmed by a positive test within 14 days of performing a labor or service at a place of work after the stay-at-home order was issued on March 19. The presumption will stay in place for 60 days after issuance of the executive order.

Eligibility can be rebutted by the employer, but under strict guidelines. California’s Director of Industrial Relations Victoria Hassid said she will be issuing guidance on the EO in the coming days.

NV Governor: Setoffs and Garnishments Related to Stimulus
On April 30, Nevada Governor Steve Sisolak issued Directive 017. Section 6 of the directive states that setoffs from COVID-19 stimulus funds are prohibited.

The directive also stays garnishments other than child support, spousal support, or criminal restitution payable to victims. Section 3 of the directive states that funds or property garnished or attached after the date of the order shall be immediately returned to the debtor, and the debtor shall not be required to claim an exemption.

The Nevada Credit Union League has sent a letter to the Nevada Financial Institutions Division (FID) regarding guidance with the operational challenges this presents. The League will keep credit union leaders informed of what it learns.

In the meantime, the League urges Nevada credit unions to comply to the best of their ability. They should ensure that all staff are aware that if a member has had any stimulus funds automatically applied to cover an overdraft and wishes the overdraft to be reinstated, the credit union will take immediate action.

A credit union should consult with legal counsel, but it may want to consider posting a message on its website similar to the one below to keep members informed, including a staff representative’s name, phone number and email address for members with additional questions:

At your credit union, if accounts are overdrawn, any deposits are automatically applied to cover negative balances. However, we are committed to ensuring you have full access to your CARES Act stimulus funds. Please contact us if you have questions or need further information on how we can help you.
Your credit union continues to be here for you during these unprecedented times.

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