What are the Employer’s Responsibilities in a Wage Garnishment?

As an employer, dealing with a wage garnishment can be a difficult and awkward task. When the business is small and employee relationships have been cultivated, then having to be in the middle of a wage garnishment is all the more uncomfortable. The following is a brief guide to the wage garnishment process including what to expect and what your responsibilities are.


What is Wage Garnishment?

In a wage garnishment, the employer receives a court order to garner a worker’s wages since the worker has incurred debts that must be repaid. Common debts that require wage garnishment include: alimony payments, student loan repayments, unpaid child support and taxes. Most wage garnishments are from court orders though some may be issued from the Internal Revenue Service or State Tax Collection Agency.

The Employee’s Legal Responsibilities

In the event of receiving notification that you have to garner employee’s wages, You should inform the employee in question. You will receive a ‘wage garnishment package’ with all the information that you need to know including calculating the amount of the wages you have to garnish and where to send the money to. You will need to complete and return the form within 20 days to avoid potential civil and criminal liability.

Calculating Wage Garnishment

The garnished amount may not exceed 25 percent of the employee’s disposable earnings, or the amount by which his or her disposable income exceeds 30 times the federal minimum wage. The exact calculations and information will be provided in the wage garnishment package.

Types of Compensation That Fall Under Wage Garnishment

The provisions of the Consumer Credit Protection Act governing wage garnishment apply to all employers and employees who earn compensation for personal services. Wages, salaries, commissions, bonuses, and pension and retirement plan payments are all considered to be compensation for purposes of wage garnishments. Tips, however, are usually not considered earnings in the case of wage garnishment.

After Wage Garnishment

When the wage garnishment is finished and the employee has paid off all his debt the employer will be notified by letter from the creditor. The document is called a Notice of Termination of Wage Garnishment Order. At this point the employer has the legal requirement to stop deducting the employee’s pay and immediately return the worker to his or her full pay.

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