Garnishing Wages: a Complex Process

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man holding hundreds of dollarsWhile wage garnishments are a fact of life for anyone who processes payroll, they also can turn into a tedious, time-consuming hassle. By definition, wage garnishment is a legal procedure through which a portion of a person’s earnings are required to be withheld for the payment of a debt. Regulated by Title III of the Consumer Credit Protection Act, garnishments are allowed only in select states, and must be authorized by a court.

Although Child Support garnishments are the most common, other types of garnishments include creditor garnishments, federal tax levies, and state tax levies. Child Support orders are issued by each state’s Child Support Enforcement agency, which also determines the amount to be withheld. Child Support orders do not stop until the employer receives a court order directing them to cease the garnishment.  Other types of garnishments typically have a goal amount that that will satisfy the employee’s debt, and when that amount is reached, the deduction is stopped.

When an employer receives a garnishment or Child Support order (typically via U.S. mail, although some agencies submit them electronically), whoever processes the company’s payroll must begin deducting the specified amount from the employee’s check each pay period and remitting that money to the appropriate party.

Most creditor garnishments require that an answer or interrogatory be sent to the authorizing court and to the creditor, prior to the first deduction being made. Responses typically must be notarized and returned by mail within seven days of receipt.

If an employer does not remit payments timely – or fails to remit the payments – that employer can be held liable and forced to pay what is owed by the employee, as well as court costs.  This usually requires legal action, escalating the costs.

For many companies, working with a Professional Employer Organization (PEO) removes the administrative burden of payroll, including garnishments and other deductions, so that they can focus on running their business. The PEO not only processes payroll and takes care of garnishments, but also responds to all related correspondence and answers required interrogatories.

Contact the author directly at susie.gurley@staffone.com. This is the eighteenth post in our 30 Days of HR Outsourcing series. Visit us each day in November for information on HR, payroll, benefits, workers’ comp and risk management topics, or subscribe to be notified instantly when a new post is published.

Photo copyright: Sergey Bogachuk