Got a Wage Garnishment Order? Steps to Follow and Mistakes to Avoid

Receiving a wage garnishment order can be intimidating, particularly for small employers who don't encounter them often. However, employers play an important role in the garnishment process and they should respond promptly and accurately to avoid potential penalties.

KEY POINTS

Wage garnishment orders require timely employer action and careful attention to detail.
Review all garnishment documents thoroughly, including withholding instructions and response requirements.
Ensure withholding amounts comply with applicable federal and state limits.
Remit withheld wages as directed and maintain accurate records of all payments.
When multiple garnishments apply to the same employee, seek guidance before determining priority.
Consult legal counsel to help determine limits on withholding and the priority of orders when an individual has multiple garnishments.

What is a wage garnishment?

A wage garnishment is generally a court or agency order for an employer to withhold a certain amount of an employee’s wages for the payment of a debt. Some of the most common reasons for wage garnishment include:

Child support obligations
Tax debts
Student loan defaults
Consumer debts
Bankruptcy orders

While garnishment requirements can vary based on the type of debt and applicable laws, employers are typically required to comply once they receive a valid order.

Steps to take when you receive a garnishment order

If you receive a garnishment order, start by taking the following steps, reaching out to counsel as needed.

1. Review the order carefully.

When a garnishment notice arrives, review it promptly. The order will typically include:

The name and other identifying information of the employee subject to the garnishment
The type of garnishment
The amount to withhold or the formula for calculating the withholding
The date withholding must begin
Instructions for remitting payments
Any employer response requirements

Thoroughly review all instructions in the order and consult counsel with any questions.

2. Determine whether a response is required.

Some garnishment orders require the employer to complete and return forms confirming the employee's employment status, pay frequency, or other information. Pay close attention to any response deadlines and retain copies of all submitted documents.

3. Notify the employee.

Employers should review the order and determine what type of notice is required. The employer may need to provide the employee with a copy of the garnishment order pursuant to the order or applicable law. Priority determinations can vary based on the specific circumstances, so employers should consider contacting the issuing court or agency consult counsel as needed.

4. Begin withholding on time.

Once withholding is required, employers should begin deductions according to the order's instructions. Delayed implementation could expose the employer to penalties and potential liability for amounts that should have been withheld.

5. Remit payments as directed.

After withholding funds, submit payments to the designated court, agency, or recipient in accordance with the instructions provided. Be sure to meet all remittance deadlines and maintain records of payments made.

Employers should continue withholding and remitting payments as directed until they receive notice to stop or otherwise satisfy the terms of the order.

Limits on withholding

Federal law and many state laws limit the amount of an employee's wages that may be garnished. In some cases, state protections are more restrictive than federal requirements.

When state and federal laws differ, employers generally must follow the law that results in the smaller garnishment amount.

Calculation rules vary depending on the type of garnishment and the laws involved, so employers should carefully review the applicable requirements before processing deductions.

Note: Federal law also prohibits employers from taking adverse action against an employee for any one debt. State law may provide additional protection.

Handling multiple garnishment orders

Priority rules can be complex and may depend on the timing and type of the garnishments involved, as we as federal and state law. For example, child support orders generally receive priority over most other garnishments.

Priority determinations can vary based on the specific circumstances, so employers should contact the issuing court or agency for guidance and consult legal counsel as needed.

Common employer mistakes to avoid

Waiting too long to act

Ignoring a garnishment order or delaying implementation can lead to penalties and increase compliance risks. Review and process orders as soon as they are received.

Withholding the wrong amount

Misinterpreting garnishment limits or withholding instructions can result in too much or too little withholding. Always verify calculations and applicable legal requirements.

Missing employer-response deadlines

If the order requires a response, failing to submit the required information may result in penalties.

Failing to remit payments correctly

In addition to withholding wages, employers must ensure they remit them to the proper recipient and within the required timeframe.

Guessing about garnishment priorities

When multiple orders apply, determining which one takes precedence can be complicated. Seek guidance rather than relying on assumptions.

Conclusion

Wage garnishment orders require employers to take timely and accurate action. Establish clear procedures for reviewing orders, calculating withholding amounts, responding to agency requests, and remitting payments in compliance with the order and applicable law. And remember to consult counsel with any questions on how the order applies to your employee and your business.

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