Key Takeaways:
- A wage garnishment order allows employers to deduct a portion of the employee’s wages to pay a debt or financial obligation.
- While most wage garnishments are from court orders, others are mandated by government agencies, such as the Internal Revenue Service (IRS).
- The Consumer Credit Protection Act (CCPA) establishes limits on the amount that can be garnished from an employee’s wages based on the worker’s disposable earnings.
- Common payroll garnishment types include child support, alimony, student loans, and unpaid taxes.
- The CCPA prohibits employers from firing an employee because of a garnishment order for a solitary debt, but that protection doesn’t extend to employees with multiple wage garnishments.
What Is Wage Garnishment
A wage garnishment is a legal deduction from an employee’s wages, mandated by court orders or government agencies, to satisfy debts such as alimony or spousal support, tax levies, child support, or student loans. Ensuring compliance with payroll garnishment rules is crucial, as failure to do so can lead to serious consequences, including fines and penalties.
However, payroll garnishment rules won’t apply to employees who voluntarily agree to have their employers deduct and turn over specified amounts of their wages to creditors. These transactions are not considered wage garnishments but voluntary wage assignments.
Types of Wage Garnishments
Wage garnishment comes in different forms. Small business owners need to understand the differences between these garnishments to ensure proper handling and compliance.
The most common types of garnishments are:
- Alimony and child support garnishments: These garnishments are ordered by a court to provide financial support for an employee’s spouse and/or children.
- Federal tax levies: This garnishment in wages is issued by the IRS, requiring employers to withhold a portion of an employee’s wages to pay outstanding tax debts. The IRS also provides the instructions for processing these garnishments, including the amount to be withheld, which is based on the employee’s tax filing status, number of dependents, and pay frequency.
- State tax levies: This payroll garnishment is issued by state tax agencies to collect the employee’s unpaid state taxes. The specific rules and procedures vary by state, so consult your state’s tax agency for guidance on handling these garnishments.
- Student loan garnishments: The Department of Education or a private loan holder can request a wage garnishment for employees who defaulted on their student loans. It should be noted that some states may impose additional restrictions or requirements, so be sure to check your state’s regulations.
- Creditor garnishments: If an employee owes money to a private creditor, the creditor can get a court order to collect the unpaid debt via payroll garnishment.
How Much of a Wage Can Be Garnished
There are federal and state laws governing wage garnishments. These regulations dictate how you must handle garnishments, ensuring that both your employees’ rights and your business’s legal obligations are met. Failure to comply with these regulations can result in fines, penalties, and even liability for the full amount of the garnishment if errors are made.
Federal Regulations
At the federal level, the primary regulation governing wage garnishments is the Consumer Credit Protection Act (CCPA). It sets the limits on how much can be garnished in any work week or pay period, based on the employee’s disposable earnings This refers to the employee's remaining income after all the mandatory deductions, such as Social Security, Medicare, state unemployment insurance, and federal, state, and local taxes. . The maximum amount of wages garnished also varies depending on the garnishment type.
Garnishment Type | Percentage of Wage Garnishment |
|---|---|
Whichever is the lower option between these computations:
| |
Alimony and Child Support | Up to 60% of an employee’s disposable earnings or up to 50% if the worker supports another spouse or child. For support payments more than 12 weeks in arrears, an additional 5% may be garnished. |
Non-tax Debts Owed to the Government (e.g., Student Loans) | Up to 15% of the employee’s disposable earnings |
Unpaid Federal and State Taxes | The IRS identifies the federal tax levy amount, based on the employee’s tax filing status, number of dependents, and pay frequency. Meanwhile, state tax levy rates vary from state to state. |
State Regulations
The state-specific regulations can vary widely, with some states imposing stricter limits on the amount that can be garnished, while others may have additional procedural requirements for employers. As a small business owner, it’s crucial to familiarize yourself with the garnishment laws in your state, including other states where you have remote or in-office employees. Note that some states provide additional protections for employees.
To view the payroll garnishment rules in your state, click the drop-down button below:
Allowable Garnishment Amount: Federal limits, except that the employee must take home at least $217.50 per week
Employer Fee: $2 per month, child support only
Employee Protections Beyond Federal Law: Cannot terminate employee because of garnishment
Employer Penalties for Failure to Comply or for Taking Adverse Employment Action: Contempt
Allowable Garnishment Amount: Maximum amount is 25% of disposable weekly income. No garnishment allowed if weekly net income is $350 or less.
Employer Fee: $5 per payment
Employee Protections Beyond Federal Law: Cannot discipline, terminate, or refuse to hire based on garnishment
Employer Penalties for Failure to Comply or for Taking Adverse Employment Action: $1,000 fine, plus restitution to any employee disciplined, terminated, or not hired because of garnishment
Allowable Garnishment Amount: Federal limits
Employer Fee: $1 per pay period or $4 per month
Employee Protections Beyond Federal Law: Employers may ask new hires about existing garnishment orders, but may not make employment decision, or terminate existing employee, because of garnishment
Employer Penalties for Failure to Comply or for Taking Adverse Employment Action: Contempt, plus fines
Allowable Garnishment Amount: Federal limits
Employer Fee: $2.50 per pay period
Employee Protections Beyond Federal Law: Cannot discipline, terminate, or refuse to hire based on garnishment
Employer Penalties for Failure to Comply or for Taking Adverse Employment Action: Contempt, plus fines
Allowable Garnishment Amount: The lesser of 25% of an employee’s disposable weekly earnings or 50% of the amount by which the weekly disposable earnings exceed 40 times the present California minimum wage
Employer Fee: $1.50 per payment
Employee Protections Beyond Federal Law: Employee cannot be terminated for garnishment or proposed garnishment
Employer Penalties for Failure to Comply or for Taking Adverse Employment Action: Contempt, plus payments not made, with interest
Allowable Garnishment Amount: Federal limites
Employer Fee: $5 per month for child support only
Employee Protections Beyond Federal Law: Cannot be terminated because of garnishment
Employer Penalties for Failure to Comply or for Taking Adverse Employment Action: Contempt, plus penalties
Allowable Garnishment Amount: Maximum amount is 25% of disposable net income or the amount by which the employee’s earnings exceed 40 times the federal minimum wage or the Connecticut minimum wage, whichever is less.
Employer Fee: Not allowed
Employee Protections Beyond Federal Law: Cannot discipline, suspend, or terminate because of garnishment
Employer Penalties for Failure to Comply or for Taking Adverse Employment Action: $1,000 fine
Allowable Garnishment Amount: Federal limits
Employer Fee: Not allowed
Employee Protections Beyond Federal Law: Cannot terminate because of garnishment
Employer Penalties for Failure to Comply or for Taking Adverse Employment Action: $1,000 fine or up to 90 days in jail for the first offense. Additional offenses of up to $5,000 or one year in jail.
Allowable Garnishment Amount: Maximum of 25% of the amount by which the employee’s weekly disposable income exceeds 40 times the D.C. minimum wage
Employer Fee: $2 per payment for child support only
Employee Protections Beyond Federal Law: Cannot terminate because of garnishment or threat of garnishment
Employer Penalties for Failure to Comply or for Taking Adverse Employment Action: $10,000 fine for each instance of adverse employment action
Allowable Garnishment Amount: Federal limits, unless the employee’s income is less than 30 times the federal minimum wage, then no garnishment is allowed.
Employer Fee: $5 for the first deduction, $2 per subsequent deduction
Employee Protections Beyond Federal Law: Cannot discipline, terminate, or refuse to hire because of garnishment
Employer Penalties for Failure to Comply or for Taking Adverse Employment Action: $250 fine for first violation, $500 for each subsequent violation
Allowable Garnishment Amount: Federal limits
Employer Fee: $25 for first deduction, $3 for each subsequent deduction for child support only
Employee Protections Beyond Federal Law: Cannot terminate because of a child support garnishment
Employer Penalties for Failure to Comply or for Taking Adverse Employment Action: None
Allowable Garnishment Amount: 5% for the first $100 of monthly disposable income; 10% for the next $100; 25% on all disposable income over $200 per month
Employer Fee: $2 per deduction
Employee Protections Beyond Federal Law: Cannot discipline, terminate, or refuse to hire because of garnishment
Employer Penalties for Failure to Comply or for Taking Adverse Employment Action: Criminal contempt
Allowable Garnishment Amount: Federal limits
Employer Fee: $5 per deduction for child support only
Employee Protections Beyond Federal Law: Cannot discipline, terminate, or refuse to hire because of garnishment
Employer Penalties for Failure to Comply or for Taking Adverse Employment Action: Up to $300 fine for each violation, restitution to the employee, including reinstatement, double lost wages, and other damages.
Allowable Garnishment Amount: The lesser of 15% of gross wages or the amount of disposable income after deducting 45 times the present Illinois minimum wage.
Employer Fee: 2% of the entire amount withheld for general payroll garnishment, $5 per month for child support
Employee Protections Beyond Federal Law: Cannot discipline, terminate, or refuse to hire because of garnishment
Employer Penalties for Failure to Comply or for Taking Adverse Employment Action: $200 fine plus restitution, including reinstatement. Any officer or employee who has control over withholding is personally liable for the total amount not paid or withheld.
Allowable Garnishment Amount: Federal limits
Employer Fee: $12 or 3% of the total amount withheld, whichever is greater (50% paid by employee and 50% paid by creditor), $2 per deduction for child support.
Employee Protections Beyond Federal Law: Cannot terminate because of garnishment
Employer Penalties for Failure to Comply or for Taking Adverse Employment Action: None
Allowable Garnishment Amount: The lesser of 25% of the employee’s weekly disposable income or the amount by which the employee’s weekly disposable earnings exceed 40 times the federal minimum wage.
Employer Fee: $2 per deduction for child support only
Employee Protections Beyond Federal Law: Cannot discipline, terminate, or refuse to hire because of garnishment
Employer Penalties for Failure to Comply or for Taking Adverse Employment Action: First failure to withhold is a misdemeanor—may include fees and penalties.
Allowable Garnishment Amount: Federal limits
Employer Fee: $5 per pay period or $10 per month, whichever is less
Employee Protections Beyond Federal Law: Cannot terminate because of garnishment
Employer Penalties for Failure to Comply or for Taking Adverse Employment Action: $500 fine, and other relief
Allowable Garnishment Amount: Federal limits
Employer Fee: $1 per payment
Employee Protections Beyond Federal Law: Cannot discipline, terminate, or refuse to hire because of garnishment
Employer Penalties for Failure to Comply or for Taking Adverse Employment Action: $500 fine or up to one year in jail, or both
Allowable Garnishment Amount: Federal limits
Employer Fee: $3 per pay period
Employee Protections Beyond Federal Law: Cannot be terminated or denied employment because of one garnishment. May be terminated for three or more garnishments for unrelated debts in a two-year period. Cannot be terminated if garnishment results from an accident or illness where the employee missed 10 or more consecutive working days.
Employer Penalties for Failure to Comply or for Taking Adverse Employment Action: If terminated, employee is entitled to reinstatement and back pay
Allowable Garnishment Amount: The lesser of 25% of the employee’s disposable income or the amount by which the employee’s disposable income is over 40 times the present state minimum wage.
Employer Fee: $1 per payment for general garnishment, child support garnishments set per order
Employee Protections Beyond Federal Law: Cannot terminate because of garnishment
Employer Penalties for Failure to Comply or for Taking Adverse Employment Action: $100 fine for each missed withholding. If the employee is terminated, a $5,000 fine plus additional damages.
Allowable Garnishment Amount: The lesser of 25% of an employee’s weekly disposable income or the employee’s weekly disposable income less 30 times the Maryland minimum wage
Employer Fee: $2 per deduction for child support only
Employee Protections Beyond Federal Law: Cannot terminate employee for having one garnishment in a year
Employer Penalties for Failure to Comply or for Taking Adverse Employment Action: $10,000 fine and up to one year in jail
Allowable Garnishment Amount: The greater of 15% of the employee’s gross wages or disposable income less than 50 times the present Massachusetts minimum wage.
Employer Fee: $1 per pay period
Employee Protections Beyond Federal Law: Cannot discipline, terminate, or refuse to hire based on garnishment
Employer Penalties for Failure to Comply or for Taking Adverse Employment Action: $1,000 plus damages
Allowable Garnishment Amount: Federal limits
Employer Fee: $6 per garnishment
Employee Protections Beyond Federal Law: Cannot discipline, terminate, or refuse to hire based on garnishment
Employer Penalties for Failure to Comply or for Taking Adverse Employment Action: If terminated, the employee must be reinstated, and paid all lost wages and benefits.
Allowable Garnishment Amount: Federal limits
Employer Fee: $1 per payment, child support only
Employee Protections Beyond Federal Law: Cannot discipline, terminate, or refuse to hire based on garnishment
Employer Penalties for Failure to Comply or for Taking Adverse Employment Action: If terminated, the employee is entitled to reinstatement and back pay.
Allowable Garnishment Amount: Federal limits
Employer Fee: $2 per payment
Employee Protections Beyond Federal Law: Cannot discipline, terminate, or refuse to hire based on garnishment
Employer Penalties for Failure to Comply or for Taking Adverse Employment Action: None
Allowable Garnishment Amount: Federal limits
Employer Fee: 2% or $8 for general garnishment, whichever is greater. $6 per month for child support
Employee Protections Beyond Federal Law: Cannot discipline, terminate, or refuse to hire based on garnishment
Employer Penalties for Failure to Comply or for Taking Adverse Employment Action: Company liable for missed payments. Also subject to a $500 fine.
Allowable Garnishment Amount: If weekly wages are less than $217.50, no garnishment is allowed. Weekly wages between $217.50 and $290, only amounts exceeding $217.50 can be garnished. For employee’s earning over $290 per week, 25%.
Employer Fee: $5 per month for child support only
Employee Protections Beyond Federal Law: Cannot terminate employee because of garnishment
Employer Penalties for Failure to Comply or for Taking Adverse Employment Action: Up to $500 fine, employee reinstatement, and back pay.
Allowable Garnishment Amount: Federal limits
Employer Fee: $2.50 per month for child support only
Employee Protections Beyond Federal Law: Cannot discipline, terminate, or refuse to hire based on garnishment
Employer Penalties for Failure to Comply or for Taking Adverse Employment Action: Company liable for missed payments. Also subject to a $500 fine, reinstatement, and back pay.
Allowable Garnishment Amount: The lesser of 25% of employee’s disposable income or the amount by which their disposable income exceeds the federal minimum wage.
Employer Fee: $3 per pay period, up to $12 per month for general garnishment. $3 per payment for child support.
Employee Protections Beyond Federal Law: Cannot discipline, terminate, or refuse to hire based on garnishment
Employer Penalties for Failure to Comply or for Taking Adverse Employment Action: $1,000 fine per pay period, plus the entire missed withholding amount
Allowable Garnishment Amount: Federal limits
Employer Fee: $1 per payment
Employee Protections Beyond Federal Law: Cannot discipline, terminate, or refuse to hire based on garnishment
Employer Penalties for Failure to Comply or for Taking Adverse Employment Action: $1,000 fine plus $100 fine per pay period where withholding is not done
Allowable Garnishment Amount: If an employee earns less than 250% of the federal poverty level, 10% of wages can be garnished. Over that, 25%.
Employer Fee: $1 per payment for child support only
Employee Protections Beyond Federal Law: Cannot discipline an employee because of garnishment
Employer Penalties for Failure to Comply or for Taking Adverse Employment Action: If terminated, the employee must be reinstated and paid all lost wages, plus damages.
Allowable Garnishment Amount: The lesser of 25% of the employee’s disposable income or the amount by which weekly disposable income exceeds 40 times the federal minimum wage.
Employer Fee: $1 per payment
Employee Protections Beyond Federal Law: Cannot discipline, terminate, or refuse to hire based on garnishment
Employer Penalties for Failure to Comply or for Taking Adverse Employment Action: Company liable for the entire amount not withheld, plus reinstatement if terminated, and damages. Possible contempt of court.
Allowable Garnishment Amount: 10% of an employee’s gross wages or 25% of disposable income exceeding 30% of the federal minimum wage, whichever is less.
Employer Fee: Not allowed
Employee Protections Beyond Federal Law: Cannot discipline, terminate, or refuse to hire based on garnishment
Employer Penalties for Failure to Comply or for Taking Adverse Employment Action: $500 fine for the first offense, $1,000 fine for each subsequent offense. If terminated, must rehire the employee and pay up to six weeks lost income.
Allowable Garnishment Amount: Federal limits
Employer Fee: $1 per payment
Employee Protections Beyond Federal Law: Cannot discipline, terminate, or refuse to hire based on garnishment
Employer Penalties for Failure to Comply or for Taking Adverse Employment Action: If terminated, employee may be rehired, receive lost income, costs, and attorney’s fees.
Allowable Garnishment Amount: The lesser of 25% of the employee’s weekly disposable income or the amount by which the income exceeds 40 times the federal minimum wage.
Employer Fee: Not allowed
Employee Protections Beyond Federal Law: Cannot terminate employee because of garnishment
Employer Penalties for Failure to Comply or for Taking Adverse Employment Action: If terminated, employee may be reinstated, and employer must pay double back pay. Possible contempt of court.
Allowable Garnishment Amount: Federal limits
Employer Fee: $3 per pay period for general garnishment. $2 or 1% of amount withheld for child support, whichever is greater
Employee Protections Beyond Federal Law: Cannot terminate an employee because of a single garnishment in a 12-month period
Employer Penalties for Failure to Comply or for Taking Adverse Employment Action: Up to $200 fine and up to 30 days in jail
Allowable Garnishment Amount: Federal limits
Employer Fee: $5 per payment for child support, $10 for general garnishment
Employee Protections Beyond Federal Law: Cannot terminate employee because of garnishment, unless employee has two or more garnishments in one year
Employer Penalties for Failure to Comply or for Taking Adverse Employment Action: Company must pay lost wages, $200 fine, full amount not withheld, and must rehire the employee, if terminated.
Allowable Garnishment Amount: Federal limits
Employer Fee: $5 per month for child support only
Employee Protections Beyond Federal Law: Cannot terminate employee because of garnishment
Employer Penalties for Failure to Comply or for Taking Adverse Employment Action: $250 fine plus all amounts not withheld. If terminated, may rehire employee, pay back pay, punitive damages, $200 fine, and attorney’s fees.
Allowable Garnishment Amount: Back rent, federal tax, state tax are limited to 10%. Student loans, 15%. Child support, 60%.
Employer Fee: 2% of amount withheld per payment
Employee Protections Beyond Federal Law: Cannot discipline, terminate, or refuse to hire based on garnishment
Employer Penalties for Failure to Comply or for Taking Adverse Employment Action: $1,000 fine, jail, and contempt
Allowable Garnishment Amount: The greater of 25% of the employee’s disposable income or 30 times the federal minimum wage.
Employer Fee: $5 per general garnishment order, $2 per child support payment
Employee Protections Beyond Federal Law: Cannot discipline, terminate, or refuse to hire based on garnishment
Employer Penalties for Failure to Comply or for Taking Adverse Employment Action: Company is liable for full amount not withheld, plus interest. $100 fine for disciplining employee and, if terminated, reinstatement with back pay.
Allowable Garnishment Amount: Federal limits, except that no garnishments are allowed for credit card debt, other credit purchases, rent, or lease.
Employer Fee: $3 per payment for child support only
Employee Protections Beyond Federal Law: Cannot terminate employee because of garnishment
Employer Penalties for Failure to Comply or for Taking Adverse Employment Action: $500 fine for disciplining, terminating, or refusing to hire
Allowable Garnishment Amount: The greater of 20% of the employee’s weekly disposable income or 40 times the federal minimum wage
Employer Fee: $15 per garnishment order
Employee Protections Beyond Federal Law: Cannot discipline, terminate, or refuse to hire based on a child support garnishment
Employer Penalties for Failure to Comply or for Taking Adverse Employment Action: For violating employee rights, company may be guilty of a petty offense and subject to fines.
Allowable Garnishment Amount: The greater of 25% of the employee’s weekly disposable income or 30 times the federal minimum wage.
Employer Fee: 5% of amount withheld, up to $5 per month, for child support and alimony only
Employee Protections Beyond Federal Law: Cannot discipline, terminate, or refuse to hire based on a child support or alimony garnishment
Employer Penalties for Failure to Comply or for Taking Adverse Employment Action: $50 fine and up to 30 days in jail
Allowable Garnishment Amount: Federal limits
Employer Fee: Actual cost or up to $10 per month, whichever is less, for general garnishment. $10 per month for child support, and $5 per month for alimony.
Employee Protections Beyond Federal Law: Cannot discipline, terminate, or refuse to hire because of child support or alimony garnishment
Employer Penalties for Failure to Comply or for Taking Adverse Employment Action: If terminated, employee must be reinstated with full benefits, back pay, and possible damages. $200 fine for each instance of failing to withhold garnishment.
Allowable Garnishment Amount: The greater of 25% of the employee’s weekly disposable income or 30 times the federal minimum wage.
Employer Fee: $10 for single garnishment, $25 for ongoing, one time
Employee Protections Beyond Federal Law: Cannot terminate or discipline an employee because of a child support garnishment
Employer Penalties for Failure to Comply or for Taking Adverse Employment Action: $1,000 fine plus interest and damages to employee
Allowable Garnishment Amount: The lesser of 25% of the employee’s weekly disposable income (15% for credit card debt) or 30 times the federal minimum wage (40 times for credit card debt)
Employer Fee: $5 per month for child support only
Employee Protections Beyond Federal Law: Cannot terminate employee because of garnishment. Any termination of an employee within 60 days of company receiving a garnishment notice or order is presumed to violate Vermont law.
Employer Penalties for Failure to Comply or for Taking Adverse Employment Action: If terminated, must reinstate the employee with back pay and damages. Company is liable for any amounts not withheld plus interests and costs.
Allowable Garnishment Amount: The greater of 25% of employee’s weekly disposable income or 40 times the federal minimum wage.
Employer Fee: $10 for each general garnishment, $5 per child support payment
Employee Protections Beyond Federal Law: Cannot terminate employee for child support garnishment
Employer Penalties for Failure to Comply or for Taking Adverse Employment Action: $1,000 for each instance of violating an employee’s rights
Allowable Garnishment Amount: The lesser of 25% of the employee’s weekly disposable income or 30 times the federal minimum wage.
Employer Fee: $10 for first payment, $1 for each subsequent for child support and alimony. $15 for first payment, $1 for subsequent for Department of Social and Health Services.
Employee Protections Beyond Federal Law: Cannot terminate an employee for garnishment unless company has received three or more separate and unrelated garnishments in a 12-month period
Employer Penalties for Failure to Comply or for Taking Adverse Employment Action: $2,500 fine per violation, plus double lost wages to employee and possible reinstate, if terminated. Company is liable for full amount not withheld plus costs.
Allowable Garnishment Amount: The lesser of 20% of the employee’s weekly disposable income or 30 times the federal minimum wage.
Employer Fee: $1 per payment for child support only
Employee Protections Beyond Federal Law: Cannot take any adverse action against employee because of garnishment
Employer Penalties for Failure to Comply or for Taking Adverse Employment Action: Up to $1,000 fine per violation of employee’s rights
Allowable Garnishment Amount: The greater of 20% of the employee’s weekly disposable income or 30 times the federal minimum wage
Employer Fee: $3 per payment for child support or alimony only
Employee Protections Beyond Federal Law: Cannot take any adverse action against employee because of garnishment
Employer Penalties for Failure to Comply or for Taking Adverse Employment Action: If terminated, employee may seek reinstatement, back pay, back benefits, restoration of seniority, and attorney’s fees. Company is liable for a $500 fine for each child support payment not withheld.
Allowable Garnishment Amount: Federal limits
Employer Fee: $5 per payment for child support only
Employee Protections Beyond Federal Law: Cannot terminate employee for garnishment
Employer Penalties for Failure to Comply or for Taking Adverse Employment Action: If terminated, the employee may seek reinstatement, 30 days back pay, and costs. $200 fine for each failure to withhold.
The impact of garnishments on your standard payroll process can be significant, as it requires careful attention to detail and accurate calculations. Ensuring the proper amount is withheld and remitted to the appropriate agency or creditor is critical, as any errors could result in your business being held liable for the outstanding debt. Mishandling garnishments can lead to fines and penalties, further emphasizing the importance of strict compliance with all applicable regulations.
How Wage Garnishment Works
Garnishments are involuntary and required by law to satisfy specific debts. However, these are only applied to employee wages after deducting payroll taxes, such as federal, state, local, and Federal Insurance Contributions Act (FICA) taxes. Voluntary deductions, such as health insurance premiums or contributions to a 401(k) plan, are also deducted before garnishment amounts.
How to Process Payroll Garnishments
To help you navigate the payroll garnishment process, below is a detailed step-by-step guide:
1. Review the Garnishment Order
Upon receiving a garnishment order, carefully review it for accuracy and completeness. Ensure that the employee’s name, Social Security number, and other identifying information are correct. Verify that the order is from a legitimate source, such as a court or government agency.
If you have any questions, check the wage garnishment notice as it usually includes the information of the person or department you can contact. Make sure you move swiftly, as you may be given limited time to start the garnishment or respond to let the notice provider know whether the employee no longer works for you.
2. Notify the Employee
Inform the affected employee about the garnishment order in writing, providing them with a copy of the order and any accompanying documents. Be prepared to answer questions and address concerns the employee may have. For tips, click here to see best practices for communicating wage garnishment orders with employees.
If the employee has questions or thinks the order is incorrect, they need to contact the right court or agency. You cannot ignore the garnishment order simply at the request of the employee.
3. Determine the Employee’s Disposable Earnings
Calculate the employee’s disposable earnings, which is their gross pay minus any legally required deductions (e.g., taxes, Social Security contributions, etc.). This figure will be used to determine the maximum garnishment amount according to federal and state regulations.
4. Calculate the Garnishment Amount
Apply the relevant federal and state limits to the employee’s disposable earnings to determine the correct garnishment amount. Be sure to account for any specific rules or exemptions that may apply to the type of garnishment (e.g., child support, tax levies, etc.). The notice should provide you with information on how to calculate the withholding amount or provide you with a specific dollar figure, based on your company’s payroll frequency.
5. Apply the Garnishment to the Employee’s Pay
Deduct the calculated garnishment amount from the employee’s wages before issuing their paycheck. Ensure that all other payroll deductions (e.g., taxes, retirement contributions, etc.) are applied correctly and in accordance with the law.
Before the first payroll run with the garnishment deductions, I recommend reminding the employee that the next paycheck will be less. This will allow the worker to better plan finances for the next week or until the garnishment order has been completed.
6. Remit the Withheld Funds
Send the withheld garnishment amount to the appropriate agency or creditor as specified in the garnishment order. Be sure to follow any specific remittance instructions and deadlines provided. If you’re allowed to withhold an administrative fee for your company—usually just a few dollars—this is when you would do so.
7. Update Payroll Records and Maintain Documentation
Update your payroll records to reflect the garnishment and keep detailed documentation of all actions taken. This includes copies of garnishment orders, correspondence with employees, calculations, and remittance records. Proper record-keeping is essential for demonstrating compliance with payroll garnishment rules and resolving any potential disputes.
8. Monitor for Changes or Updates
Stay vigilant for any changes to the garnishment order, such as modifications, terminations, or new orders. Adjust your payroll processing accordingly and inform the affected employee of any changes.
How to End a Wage Garnishment
To stop garnishment withholding once the debt has been fulfilled, you’ll need to follow these steps:
- Wait for a garnishment update: Wait for an official order or notice from the issuing court or agency indicating that the debt has been satisfied or the garnishment has been terminated. You cannot stop garnishment withholdings based on information from your employee alone.
- Review the order or notice: Carefully check the order or notice to ensure it’s legitimate and contains accurate information about the employee and the garnishment. Also, ensure that the total amount received by the agency matches the total amount deducted as indicated in your payroll records.
- Update your payroll process: Once you’ve confirmed the validity of the order or notice, update your payroll process to cease withholding the garnishment amount from the employee’s wages. If you fail to end the garnishment on time and additional amounts are withheld, your business could be liable to your employee for repayment, plus penalties.
- Notify the employee: Inform the affected employee in writing that the garnishment has been fulfilled or terminated and that garnishment deductions will no longer be withheld.
- Update your records: Document the receipt of the order or notice, any communications with the employee, and the changes made to your payroll process as a result of the garnishment termination.
How to Effectively Communicate Garnishments to Employees
Handling payroll garnishments can be a sensitive matter, as it involves discussing an employee’s personal financial situation. As an employer, it’s essential to approach these conversations with empathy, professionalism, and discretion.
Here are some best practices for communicating with employees about payroll garnishments.
Before providing written notice of the garnishment, it’s recommended to have an initial discussion with the employee in a private setting. This allows you to explain the situation, answer any questions, and address concerns before formalizing the process.
In today’s remote workplace environment where you and the employee are not in the same location, you can have this conversation over video chat. However, ensure that it’s done in a timely manner, as you’re limited in the time you have before you must begin deductions.
After discussing the garnishment with the employee, follow up with a written notice that includes a copy of the wage garnishment order and any accompanying documents. The written notice should clearly explain the garnishment process, your obligations as an employer, and the impact on the employee’s pay. Maintaining a record of this written communication is essential for demonstrating compliance with garnishment regulations.
Encourage the employee to ask questions and voice any concerns they may have. Be prepared to provide accurate information about the garnishment process and direct the employee to relevant resources or agencies for additional support. Remain empathetic and understanding in your responses, acknowledging the potential stress and anxiety the garnishment may cause the employee.
If an employee asks you to disregard the garnishment order, it’s crucial to explain that you’re legally obligated to comply and that failure to do so could result in penalties for both the employee and the business. Encourage the employee to seek legal advice or contact the issuing agency or court if they believe the garnishment is incorrect or unjustified.
To maintain trust and protect the employee’s privacy, keep all discussions and written communications about the garnishment confidential. Only share information about the garnishment with those who have a legitimate need to know, such as payroll staff or supervisors directly involved in the process. Avoid discussing the garnishment in public areas or with other employees.
Importance of Recordkeeping & Reporting
Recordkeeping was mentioned briefly above, but it’s worth spending more time discussing this. Because a garnishment can also upend your typical payroll process, it’s important to keep your records clean and accessible to those who need the information.
Here are some key points to consider when managing records related to wage garnishments:
- Garnishment order: Keep a copy of the original garnishment order and any accompanying documents in a secure location. This includes court orders, notices from government agencies, or other official communications related to the garnishment.
- Amounts withheld: Maintain a record of all amounts withheld from the employee’s wages for each pay period, including the date of each deduction and the specific garnishment type (e.g., child support, tax levy, etc.). Your payroll provider should have a report available that you can run during each payroll period.
- Remittance records: Document the dates and amounts of all remittances made to the appropriate agency or creditor, as well as any confirmation numbers or correspondence related to the payments.
- Administrative fees: If your state allows employers to retain a small administrative fee for processing garnishments, keep a record of these fees and ensure they’re accurately reflected in your payroll records.
- Employee communications: Retain copies of all written communications with the employee regarding the garnishment, including the initial written notice and any subsequent updates or changes.
Regularly reviewing and updating your garnishment records is essential for staying organized and prepared for any payroll inquiries or disputes. These records will also come in handy whenever you conduct payroll audits.
Wage Garnishment Frequently Asked Questions (FAQs)
This depends on the type of garnishment and federal/state regulations. For example, child support garnishments can range from 50% to 65% of the employee’s disposable earnings. Wage garnishment for federal student loans is up to 15%, while ordinary garnishments are up to 25% of the disposable earnings or the amount exceeding 30 times the federal minimum wage—whichever is less.
There isn’t a fixed timeline for how long wages can be garnished. Many factors can affect this, such as the amount of debt that the employee owes, the employee’s salary, and the federal/state limits on how much wage can be garnished per pay run.
As an employer, you can’t ignore or stop a wage garnishment just because you want to or your employee requested you to. Failure to comply with the court- and government-ordered garnishment can be costly. You may be liable for as much as the employee’s debt, plus penalty fines and interest.
It depends on the number of wage garnishment orders. Under CCPA regulations, employers can’t terminate employees whose wages have been garnished for a solitary debt. This rule doesn’t apply to employees with multiple wage garnishment orders. However, employees with one or multiple garnishments can be fired if there’s a legitimate business reason for doing so, like poor performance.
