Corporate Payroll Services

If you have received a notice that your employee is subject to wage garnishments, however, the employee wishes you would not comply, would you know how to handle this situation?

Understanding the process and knowing what you can (and cannot) do in response to a garnishment notice might be difficult for an employer, especially one who has not handled one before.  One thing important to note is employers are obligated to comply with these notices, regardless of how their employees may feel.

What are wage garnishments?

A wage garnishment is generally either a court-ordered or government agency response to an unpaid debt that requires an employer to withhold money from an employee’s paycheck.  The six common types of wage garnishments include child support, creditors, bankruptcy orders, student loans, tax levies, and wage assignments.

How much of an employee’s paycheck can be taken?

Federal law places limits on how much can be garnished.  The amount is limited to 25% of net disposable earnings (what is left after mandatory deductions) or the amount by which your employee’s weekly wages exceed 30 times the minimum wage, whichever is lower.  Some states set a lower percentage limit for how much of your wages can be garnished.  There are cases, however, where wage garnishments can claim even more of an employee’s paycheck, such as in the case of child support, where up to 50% of disposable income can be taken.

How should you process a wage garnishment order?

When you receive an order from a court or garnishing agency, you should:

  • Thoroughly review the garnishment instructions.
  • Notify the employee of the garnishment.  (You may also want to explain your legal obligations and why you cannot refuse to withhold the required amounts.)
  • Immediately begin withholding and remitting the ordered amount until you are notified to do otherwise by the agency from which the original order was received.
  • If we are processing your payroll, forward the garnishment notice to us so we can properly set up the deduction for the employee.  Please note there is a fee to set up each garnishment deduction.

Employees do have the right to challenge the garnishment.  If they choose to do so, you can refer the employee to the garnishing agency or creditor.  During this process, keep in mind that your obligation to withhold from the employee’s pay remains in effect until you receive new instructions from the agency or creditor.

If you would like more information on wage garnishments or need essential information on human resources issues such as benefits, hiring, management and more, Corporate Payroll Service’s HR Support Center is a resource on which you can rely.