Payroll employees are usually swamped with plenty of calculations each pay period, figuring out proper deductions for a plethora of taxes, benefits and other necessary withholdings. There are other kinds of deductions, though, that may cause confusion. A payroll garnishment is a mandatory order to deduct wages for an outstanding debt or other financial obligation that an employer must abide by. Failing to properly withhold for garnishments, levies and child support could have significant backlash on a business. Making the deduction Upon receipt of a garnishment notice, payroll should automatically start taking the requested amount out of that person’s wages, before taxes or any other funds are removed. For state and federal tax garnishments, this is usually a 10 percent reduction, unless the individual makes less than a certain amount. A garnishment can request up to 25 percent of disposable or after-tax income. If there is already an outstanding order in place, contacting the issuing body and informing them of this status is mandatory. Sometimes, the requester will ask that the garnishment be held until the previous order is completed and then have payroll begin deducting for that request, but employers are not required to do so. When no to deduct If a child support order is already in place, that will always take precedence to a garnishment or levy of any kind. Making a support reduction, though, may leave enough gross income left to send some remittance on a garnishment, so be sure to notify the requesting party of this condition. Failing to remit the expected amount could cause the order to default, leading to more trouble for both the individual and the company. What employers must do On top of reducing income on a regular basis for the affected individual, an employer must notify the worker this is occurring and why. Usually the collection agency will have advised the person already, but it is a business’ responsibility to do this as well. Furthermore, a company is not allowed to fire a worker for having a child support or garnishment order in place. Doing so can result in serious monetary penalties, reinstatement of the person and even time in prison. There are no posting requirements of employers, though, so no flyers or signs are made available the way OSHA and FMLA guidelines might be. It is up to a business to seek out the information related to this topic. Make sure to file a New Hire report with the state department of employment each time you hire a new worker. This will give the state the opportunity to notify you of any outstanding child support obligations.
How to handle a garnishment
