Garnishment is by definition a judicial proceeding. That means that a court order would need to be pursued and entered or recorded by some clerk of court.
Apparently you have cut and pasted a part of an agreement with your former employer. The language appears to mean business. In other words it looks like no nonsense terms. It would not be unusual to find prevailing party's attorneys' fees and costs awardable as well since you apparently agreed to this remedy. As a side note, if prevailing party attorneys' fees and costs are available you might owe several times the amount you fear being garnished plus interest and possibly other remedies.
The wisest option might be to have a skilled employment lawyer review all documents which governed your prior employment relationship. Most of these matters are resolved pre-litigation since employees sometimes lose their former and current jobs if they failed to disclose everything they were obligated to disclose to secure a new position. The worst case scenario might be losing the former job, being let go from your current position, and owing several times the amount you suspect you may have to repay.
And if you did not report that money on your tax return, there may be IRS or state or local tax penalties for not doing so as well. Speak with a tax lawyer. Calling a payment "not wages or earned compensation" does not mean that you are not subject to reporting the amount on your taxes or paying taxes on it yourself. Were I facing this scenario I would lawyer up immediately because waiting longer is very likely to cost much more than resolving it pre-litigation. Just a suggestion from New York's Employment Law Reality Check law firm.
Answered on Mar 15th, 2022 at 6:46 AM