Payroll Garnishment: What Small Business Owners Need To Know
Charlette has over 10 years of experience in accounting and finance and 2 years of partnering with HR leaders on freelance projects. She uses this extensive experience to answer your questions about payroll.
A payroll garnishment, also called a wage garnishment, is a court order requiring an employer to withhold money from an employee’s paycheck to satisfy a debt the employee owes. When an employee voluntarily elects to have wage deductions for healthcare premiums or retirement benefits, that’s not a garnishment—that’s simply a payroll deduction. Payroll garnishments require a more detailed approach.
Payroll garnishment rules differ by state and type of debt, including the maximum amount you can withhold from each paycheck. Knowing what you can and cannot do will keep your company compliant and your employees happy.
Types of Payroll Garnishments
Click through the tabs below for information on the different types of garnishments.
Note that the total payroll garnishment allowed for each type below is the federal guideline. Some states have additional protections for debtors—more on that in our state-by-state breakdown.
Steps To Process a Payroll Garnishment
Doing payroll is more than just paying employees for their time worked. Payroll garnishments are often part of the payroll process, especially as companies grow.
Here’s how you’ll get notified of a payroll garnishment for an employee and how to include the garnishment in your payroll process.
Step 1: Receive Notice of Garnishment
This may be a court order or a notice from a state tax agency or the IRS. It will include details about the debt owed, the amount of the debt, and identifying information about the employee.
You need to verify the employee’s details to ensure the garnishment has been sent to the right employer. I’ve personally received garnishment orders for employees that not only weren’t current employees but also never worked for the company. So make sure you pay close attention to the details and ensure the court order has the right company and employee.
Every garnishment order can look different. Some will give you the exact breakdown of how much money you should withhold from each paycheck if you pay weekly, every other week, twice monthly, or monthly. Meanwhile, some orders will only give you the total debt owed and leave it to you to make an accurate calculation.
Step 2: Notify the Employee
Once you’ve verified that the employee works at your company, you need to speak with them. Keep it brief and confidential.
Let the employee know about the garnishment and ask them if they know about the debt or the payroll garnishment. After you’ve spoken to the employee, send them an email or a written letter detailing your conversation, the information about the debt, and how much money will be withheld from each paycheck.
Step 3: Alert Your Payroll Team
A wage garnishment will usually give you some time to comply—generally around one month. This time is given so you can verify the information and prepare your payroll department for these extra steps.
Make sure your payroll team has the garnishment order or notice from the tax agency. They’ll need this for their records and to verify the amount to withhold from each paycheck. The order will also tell your payroll team where to send the withheld amounts. Depending on the type of payroll garnishment, it may go to a local clerk of court, a tax agency, or a bank.
Step 4: Reply to the Order
In some cases, you may need to reply to the garnishment order or notice. Especially if you cannot verify the employee’s information, you need to alert the court or tax agency that they have the wrong business.
Sometimes, a court order or notice will calculate an incorrect garnishment amount. This is why it’s crucial that you understand the rules around how much you can withhold so you can catch these errors. While rare, if you withhold an inaccurate amount, your company could be liable to the employee.
Step 5: Ending the Payroll Garnishment
Upon satisfaction of the debt owed, you should receive a formal notice letting you know you can stop garnishing the employee’s wages. You cannot stop the garnishment at the request of your employee or without receiving a formal notice that the debt has been paid.
Legal Considerations
Payroll requires strict adherence to federal, state, and local laws. Ensuring your payroll processes are compliant will keep your business out of trouble and your employees happy.
Verifying Garnishment
Only certain debts can be garnished, so make sure the garnishment covers one of the debts listed above. It’s also your responsibility to verify the accuracy of the debt by verifying the employee works for you and owes the debt. Do not garnish an employee’s wages without verifying the debt is real.
Termination of Employment
You cannot terminate an employee because their wages are being garnished, although it can be an inconvenience for your payroll team, create extra compliance headaches, and make for an unhappy employee. None of that allows you to terminate an employee.
State-by-State Breakdown
Search for state-specific details for payroll garnishments in the sections below:
Alabama–Georgia
State | Allowable Garnishment Amount | Employer Fee | Employee Protections Beyond Federal Law | Employer Penalties for Failure to Comply or for Taking Adverse Employment Action |
|---|---|---|---|---|
Alabama | Federal limits, except that the employee must take home at least $217.50 per week | $2 per month, child support only | Cannot terminate employee because of garnishment | Contempt of court |
Alaska | Maximum amount is 25% of disposable weekly income. No garnishment allowed if weekly net income is $350 or less. | $5 per payment | Cannot discipline, terminate, or refuse to hire based on garnishment | $1,000 fine plus restitution to any employee disciplined, terminated, or not hired because of garnishment |
Arizona | Federal limits | $1 per pay period or $4 per month | Employers may ask new hires about any existing garnishment orders, but may not make employment decision, or terminate existing employee, because of garnishment | Contempt of court and fines |
Arkansas | Federal limits | $2.50 per pay period | Cannot discipline, terminate, or refuse to hire based on garnishment | Contempt of court and fines |
California | Federal limits | $1.50 per payment | Employee cannot be terminated for garnishment or proposed garnishment | Contempt of court for failure to comply plus payments not made with interest |
Colorado | Federal limits | $5 per month for child support only | Cannot be terminated because of garnishment | Contempt of court plus penalties |
Connecticut | 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. | Not allowed | Employee cannot be disciplined, suspended, or terminated for garnishment | $1,000 fine |
Delaware | Federal limits | Not allowed | Cannot terminate employee because of garnishment | $1,000 fine or up to 90 days in jail for first offense. Additional offenses of up to $5,000 or one year in jail |
District of Columbia | A maximum of 25% of the amount by which your weekly disposable income exceeds 40 times the D.C. minimum wage | $2 per payment, child support only | Cannot terminate employee for garnishment or threat of garnishment | $10,000 fine for each instance of adverse employment action |
Florida | Federal limits, unless employee's income is less than 30 times the federal minimum wage, then no garnishment is allowed. | $5 for first deduction, $2 per subsequent deduction | Cannot discipline, terminate, or refuse to hire based on garnishment | $250 fine for first violation, and $500 for each subsequent violation |
Georgia | Federal limits | $25 for first deduction, $3 for each subsequent deduction for child support only | Cannot terminate an employee because of a child support garnishment | None provided |
Hawaii–Louisiana
State | Allowable Garnishment Amount | Employer Fee | Employee Protections Beyond Federal Law | Employer Penalties for Failure to Comply or for Taking Adverse Employment Action |
|---|---|---|---|---|
Hawaii | 5% for the first $100 of monthly disposable income; 10% for the next $100; 25% on all disposable income over $200 per month | $2 per deduction | Cannot discipline, terminate, or refuse to hire based on garnishment | Criminal contempt of court |
Idaho | Federal limits | $5 per deduction, child support only | Cannot discipline, terminate, or refuse to hire based on garnishment | Up to $300 fine for each violation, restitution to employee (reinstatement if terminated), double lost wages, other damages. |
Illinois | The lesser of 15% of gross wages or the amount of disposable income after deducting 45 times the present Illinois minimum wage. | 2% of the entire amount withheld for general payroll garnishment, $5 per month for child support | Cannot discipline, terminate, or refuse to hire based on garnishment | $200 fine plus restitution to employee (reinstatement if terminated). Any officer or employee who has control over withholding is personally liable for the total amount not paid or withheld. |
Indiana | Federal limits | $12 or 3% of the total amount withheld, whichever is greater (50% paid by employee and 50% by creditor), $2 per deduction for child support | Cannot terminate employee because of garnishment | None provided |
Iowa | Federal limits, but Iowa caps the amount a single creditor can garnish in one calendar year per income level: $12,000 per year income, up to $250 per year in garnishment; $12,001-$15,999, $400; $16,000-$23,999, $800; $24,000-$34,999, $1,500; $35,000-$49,999, $2,000; $50,000 and up, 10% of wages. | $2 per deduction, child support only | Cannot discipline, terminate, or refuse to hire based on garnishment | First failure to withhold payment is a misdemeanor, may include fees and penalties. |
Kansas | Federal limits | $5 per pay period or $10 per month, whichever is less | Cannot terminate employee because of garnishment | $500 fine and other equitable relief |
Kentucky | Federal limits | $1 per payment | Cannot discipline, terminate, or refuse to hire based on garnishment | $500 fine or up to one year in jail, or both |
Louisiana | Federal limits | $3 per pay period | 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 employee missed 10 or more consecutive working days. | If terminated, employee is entitled to reinstatement and back pay. |
Maine–Montana
State | Allowable Garnishment Amount | Employer Fee | Employee Protections Beyond Federal Law | Employer Penalties for Failure to Comply or for Taking Adverse Employment Action |
|---|---|---|---|---|
Maine | The lesser of 25% of employee's disposable income or the amount by which the employee's disposable income is over 40 times the present state minimum wage. | $1 per payment for general garnishment, child support garnishments set per order | Cannot terminate employee because of garnishment | $100 fine for each missed withholding. If employee is terminated, $5,000 fine plus additional damages. |
Maryland | Federal limits for Caroline, Kent, Queen Anne, and Worcester counties. All other counties, the lesser of 25% of employee's weekly disposable income or the amount the employee's weekly disposable income exceeds $145. | $2 per deduction for child support only | Cannot terminate employee for having one garnishment in a year | $10,000 fine and up to one year in jail |
Massachusetts | The greater of 15% of the employee's gross wages or disposable income less than 50 times the present Massachusetts minimum wage. | $1 per pay period | Cannot discipline, terminate, or refuse to hire based on garnishment | $1,000 plus damages |
Michigan | Federal limits | $6 per garnishment | Cannot discipline, terminate, or refuse to hire based on garnishment | If terminated, employee must be reinstated, and paid all lost wages and benefits. |
Minnesota | Federal limits | $1 per payment, child support only | Cannot discipline, terminate, or refuse to hire based on garnishment | If terminated, employee is entitled to reinstatement and back pay. |
Mississippi | Federal limits | $2 per payment | Cannot discipline, terminate, or refuse to hire based on garnishment | None provided |
Missouri | Federal limits | 2% or $8 for general garnishment, whichever is greater. $6 per month for child support | Cannot discipline, terminate, or refuse to hire based on garnishment | Company liable for missed payments. Also subject to $500 fine. |
Montana | If weekly wages are less than $217.50, no garnishment 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%. | $5 per month for child support only | Cannot terminate employee because of garnishment | Up to $500 fine, employee reinstatement, and back pay. |
Nebraska–Oregon
State | Allowable Garnishment Amount | Employer Fee | Employee Protections Beyond Federal Law | Employer Penalties for Failure to Comply or for Taking Adverse Employment Action |
|---|---|---|---|---|
Nebraska | Federal limits | $2.50 per month for child support only | Cannot discipline, terminate, or refuse to hire based on garnishment | Company liable for missed payments. Also subject to $500 fine, reinstatement, and back pay. |
Nevada | The lesser of 25% of employee's disposable income or the amount by which their disposable income exceeds the federal minimum wage. | $3 per pay period, up to $12 per month for general garnishment. $3 per payment for child support. | Cannot discipline, terminate, or refuse to hire based on garnishment | $1,000 fine per pay period, plus the entire missed withholding amount |
New Hampshire | $1 per payment | Cannot discipline, terminate, or refuse to hire based on garnishment | $1,000 fine plus $100 fine per pay period where withholding is not done | |
New Jersey | If an employee earns less than 250% of the federal poverty level, 10% of wages can be garnished. Over that, 25% | $1 per payment for child support only | Cannot discipline an employee because of garnishment | If terminated, employee must be reinstated and paid all lost wages, plus damages. |
New Mexico | 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. | $1 per payment | Cannot discipline, terminate, or refuse to hire based on garnishment | Company liable for entire amount not withheld, plus reinstatement if terminated, and damages. Possible contempt of court. |
New York | 10% of an employee's gross wages or 25% of disposable income exceeding 30% of the federal minimum wage, whichever is less. | Not allowed | Cannot discipline, terminate, or refuse to hire based on garnishment | $500 fine for first offense, $1,000 fine for each subsequent offense. If terminated, must rehire employee and pay up to six weeks lost income. |
North Carolina | Federal limits | $1 per payment | Cannot discipline, terminate, or refuse to hire based on garnishment | If terminated, employee may be rehired, receive lost income, costs, and attorney's fees. |
North Dakota | 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. | Not allowed | Cannot terminate employee because of garnishment | If terminated, employee may be reinstated and employer must pay double back pay. Possible contempt of court. |
Ohio | Federal limits | $3 per pay period for general garnishment. $2 or 1% of amount withheld for child support, whichever is greater | Cannot terminate an employee because of a single garnishment in a 12-month period | Up to $200 fine and up to 30 days in jail |
Oklahoma | Federal limits | $5 per payment for child support, $10 for general garnishment | Cannot terminate employee because of garnishment, unless employee has two or more garnishments in one year | Company must pay lost wages, $200 fine, full amount not withheld, and must rehire the employee, if terminated. |
Oregon | Federal limits | $5 per month for child support only | Cannot terminate employee because of garnishment | $250 fine plus all amounts not withheld. If terminated, may rehire employee, pay back pay, punitive damages, $200 fine, and attorney's fees. |
Pennsylvania–Wyoming
State | Allowable Garnishment Amount | Employer Fee | Employee Protections Beyond Federal Law | Employer Penalties for Failure to Comply or for Taking Adverse Employment Action |
|---|---|---|---|---|
Pennsylvania | Back rent, federal tax, state tax are limited to 10%. Student loans, 15%. Child support, 60%. | 2% of amount withheld per payment | Cannot discipline, terminate, or refuse to hire based on garnishment | $1,000 fine, jail, and contempt |
Rhode Island | The greater of 25% of the employee's disposable income or 30 times the federal minimum wage. | $5 per general garnishment order, $2 per child support payment | Cannot discipline, terminate, or refuse to hire based on garnishment | Company is liable for full amount not withheld, plus interest. $100 fine for disciplining employee and, if terminated, reinstatement with back pay. |
South Carolina | Federal limits, except that no garnishments are allowed for credit card debt, other credit purchases, rent, or lease. | $3 per payment for child support only | Cannot terminate employee because of garnishment | $500 fine for disciplining, terminating, or refusing to hire |
South Dakota | The greater of 20% of the employee's weekly disposable income or 40 times the federal minimum wage | $15 per garnishment order | Cannot discipline, terminate, or refuse to hire based on a child support garnishment | For violating employee rights, company may be guilty of a petty offense and subject to fines. |
Tennessee | The greater of 25% of the employee's weekly disposable income or 30 times the federal minimum wage. | 5% of amount withheld, up to $5 per month, for child support and alimony only | Cannot discipline, terminate, or refuse to hire based on a child support or alimony garnishment | $50 fine and up to 30 days in jail |
Texas | Federal limits | Actual cost or up to $10 per month, whichever is less, for general garnishment. $10 per month for child support, $5 per month for alimony. | Cannot discipline, terminate, or refuse to hire because of child support or alimony garnishment | If terminated, employee must be reinstated with full benefits, back pay, and possible damages. $200 fine for each instance of failing to withhold garnishment. |
Utah | The greater of 25% of the employee's weekly disposable income or 30 times the federal minimum wage. | $10 for single garnishment, $25 for ongoing, one time | Cannot terminate or discipline an employee because of a child support garnishment | $1000 fine plus interest, and damages to employee |
Vermont | 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) | $5 per month for child support only | 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. | If terminated, must reinstate employee with back pay and damages. Company liable for any amounts not withheld plus interests and costs. |
Virginia | The greater of 25% of employee's weekly disposable income or 40 times the federal minimum wage. | $10 for each general garnishment, $5 per child support payment | Cannot terminate employee for child support garnishment | $1,000 for each instance of violating an employee's rights |
Washington | The lesser of 25% of the employee's weekly disposable income or 25 times the federal minimum wage. | $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. | Cannot terminate an employee for garnishment unless company has received three or more separate and unrelated garnishments in a 12-month period | $2,500 fine per violation, plus double lost wages to employee and possible reinstate, if terminated. Company liable for full amount not withheld plus costs. |
West Virginia | The lesser of 20% of the employee's weekly disposable income or 30 times the federal minimum wage. | $1 per payment, child support only | Cannot take any adverse action against employee because of garnishment | Up to $1,000 fine per violation of employee's rights |
Wisconsin | The greater of 20% of the employee's weekly disposable income or 30 times the federal minimum wage | $3 per payment for child support or alimony only | Cannot take any adverse action against employee because of garnishment | If terminated, employee may seek reinstatement, back pay, back benefits, restoration of seniority, and attorney's fees. Company liable for $500 fine for each child support payment not withheld. |
Wyoming | Federal limits | $5 per payment, child support only | Cannot terminate employee for garnishment | If terminated, employee may seek reinstatement, 30 days back pay, and costs. $200 fine for each failure to withhold. |
Bottom Line
A payroll garnishment creates extra steps and compliance issues for your small business—which is why understanding all the rules to payroll garnishment is a must to avoid complications. This is all part of being a growing business, so make sure you understand your rights and responsibilities if you get a wage garnishment order or notice for an employee.
