Regulations for Employers & Wage Garnishment
Wage garnishments are court-ordered actions that require the debtor's employer to withhold specified amounts from the debtor's wages. These wages are to be issued directly to the court or as instructed by the garnishment order. Though withholding wages may cause additional processing and procedures for the employer, the Department of Labor requires these requirements be met or become subject to penalties.
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Deductible Wages
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Title III of the Consumer Credit Protection Act allows employee earnings to be garnished by court order. These earnings include wages, salaries, commissions, bonuses, pensions and retirement income. Social Security benefits are exempt from garnishments except if the garnishment is a result of delinquent federal taxes, child support enforcement or alimony obligations. Tips are generally not included in this requirement.
Discharging Employees
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Employers are prohibited from discharging employees as a result of garnished wages. Failure to comply with this regulation can result in the employer being fined up to $1,000 and being imprisoned for up to one year. Although the Consumer Credit Protection Act protects employees from termination for the first garnishment, it does not protect employees from termination resulting from second or subsequent garnishments.
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Wage Garnishment Package
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Once a court has ordered the garnishment of an employee's wages, the employer will receive notification from the creditor. The creditor will send the employer a Wage Garnishment package that includes a letter of notification to the employer, a copy of the wage garnishment order, a wage garnishment worksheet and an employer certification form. This packet must be completed and returned to the creditor in a timely fashion. It is generally recommended that the package be completed within 14 business days of receipt. Failure to complete and return the package could result in civil and criminal actions.
Establishing Garnishment Amounts
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The wage garnishment package includes a wage garnishment worksheet, which requires employers to determine the appropriate garnishment amount. There are many stipulations to determining the garnishment amount. In most cases, garnishments cannot exceed 25 percent of the employee's disposable income. However, child support and alimony orders allow up to 50 percent of the disposable income if the employee supports a spouse or child. If the employee is independent and does not support a family, garnishment deductions for child support and alimony can include up to 60 percent of the employee's disposable income. It is important that these deductions be completed accurately. Many payroll companies offer assistance and tools in handling garnishment calculations and deductions.
Questions and Concerns
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If an employer received more than one garnishment order for an individual and are unsure the priority of the garnishments or if there questions regarding the garnishment process and procedures, contact the ordering court or initiating agency for withholding information and general answers. Although the Consumer Credit Protection Act defines the general laws for the garnishment process, it does not set specifications for these specifics.
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