Are You Prepared to Handle an Employee’s Wage Garnishments?

Are You Prepared to Handle an Employee’s Wage Garnishments?

A wage garnishment is any legal procedure where a portion of a person’s earnings are withheld by an employer for payment of alimony, child support, the default of a student loan, or unpaid taxes.

For most garnishments, the amount of pay garnished should be based on an employee’s disposable earnings, the amount remaining after legally mandated deductions.  The amount of wages that can be garnished vary depending on the originating cause.  Maximum amounts have been seen at a range from 15 percent of disposable earnings for student loans, to as much as 65 percent of disposable earnings for child support, especially if the employee is at least 12 weeks in arrears.

As an employer, what do you do when you receive an order to garnish wages?  An employer is legally obligated to make the appropriate deductions from an employee’s salary.  These are then directed and payed to the designated agency or creditor. An employer should immediately alert the employee of the garnishment in writing, detailing the specifics of the garnishment, the amount to be taken from each pay period, and the length of time the wages will be garnished.

For some types of garnishments, such as child support, the employer can actually deduct an administrative fee to offset the cost of processing the garnishment.  Taking this action protects the business from any legal repercussions for failing to respond to the order.

For more information on garnishment laws, please visit https://www.dol.gov/whd/garnishment/.

Article by: Jennie Cheek, Accounting Services - Bookkeeping

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