## Facts

- A dissolution judgment required Stephen Kanaval to pay support; later agreed orders fixed an arrearage of $123,140.63 and required $3,000 per month toward the arrears.
- After unemployment, payment on the arrearage was deferred until Stephen was reemployed.
- In 2006, Stephen became employed by Knobias, Inc. in Mississippi.
- An Illinois court ordered Stephen to resume $3,000 monthly arrearage payments and issued a statutory notice to withhold income for support to Knobias.
- The notice instructed Knobias to begin withholding within the statutory time frame and remit withheld amounts within seven business days of each pay date; it also stated withholding could not exceed limits under federal law and the law of the employee’s work state.
- Knobias was served by certified mail and, after receiving informal assurances from Stephen’s attorney that the matter would be resolved differently, withheld nothing for several months.
- After the obligee sought enforcement against Knobias, Knobias began withholding about 50% of Stephen’s net income (the asserted maximum under federal and Mississippi limits) and remitted $2,805.20 over two months.
- The trial court found Knobias knowingly failed to comply and assessed statutory penalties of $100 per day, totaling $369,000; the court denied reconsideration.

## Issues

1. Whether Knobias “knowingly” failed to remit withheld support within the statutory deadline after receiving an income-withholding notice.
2. Whether the withholding order/notice was void or unenforceable because it stated a $3,000 monthly amount that exceeded applicable wage-withholding limits.
3. Whether an Illinois court could impose statutory penalties on an out-of-state employer for noncompliance with an Illinois income-withholding notice.
4. Whether the cumulative $369,000 penalty was unconstitutional or disproportionate.

## Decision

- The appellate court affirmed the judgment imposing $369,000 in statutory penalties against Knobias.
- The court held Knobias knowingly failed to comply because it received clear written directions yet withheld nothing for months, and informal communications from the employee’s counsel did not excuse disobedience to the notice.
- The court rejected the claim that the notice was void; if $3,000 exceeded lawful limits, the notice’s limiting language required withholding of the maximum lawful amount, not zero withholding.
- The court held Illinois had authority to enforce the withholding scheme and assess statutory penalties against an out-of-state employer served with the notice.
- The court upheld the penalty as authorized by statute and not unconstitutional given the prolonged noncompliance and the enforcement purpose of the scheme.

## Legal Principles

- An employer served with an income-withholding notice must comply according to the notice’s written terms and statutory deadlines; reliance on informal assurances is insufficient to excuse noncompliance.
- When a stated withholding amount exceeds applicable federal or state withholding caps, the employer must withhold and remit up to the maximum lawful amount rather than refuse to withhold.
- Statutory schemes governing income withholding for child support may be enforced against out-of-state employers, including through monetary penalties for knowing noncompliance.
- Per-day statutory penalties may be sustained when they are the product of extended noncompliance and serve enforcement and deterrence goals, even if the total becomes large.

## Conclusion

The court affirmed substantial statutory penalties against an out-of-state employer that, despite being served with a valid child-support income-withholding notice containing applicable withholding limits, failed for months to withhold and remit any amounts and could not avoid liability by invoking informal representations that the obligation would be handled differently.


In re Marriage of Gulla, 888 N.E.2d 585 (Ill. App. Ct. 2008)