Settlement proceeds that
are back wages are subject to withholding.
Rivera v. Baker West, Inc.,
430 F.3d 1253 (9th Cir. December 13, 2005) - The parties settled Rivera's Title
VII lawsuit for $40,000, less all lawfully required withholdings. Baker
issued Rivera a check in the amount of $25,140 and retained $14,860 as
withholding. The parties disagreed over the withholding issue. This issue was presented to the district court and it held that
the settlement sum was lawfully classified as wages. Therefore, the
withholding was proper. On appeal, the Ninth Circuit affirms. In this case, Rivera had not alleged any damages for
emotional distress or any other exception that would warrant classifying the
settlement sum as anything other than an award for back pay.
