Payroll Garnishments

You likely understand the importance of responding to court orders for garnishments on employee pay, but did you know you could be held liable for the amounts if you fail to calculate them correctly?

At DM Payroll Solutions we offer four reminders about garnishments to help you avoid this potentially costly payroll mistake.

  1. As an employer, you’re responsible for calculating payroll deductions for wage garnishments – and accurately. In many states, employers can be held liable for the full judgment amount against employees for failing to respond to a court order, as well as for withholding inaccurate amounts from pay. Outsourcing payroll to a reliable provider is recommended for this and many other reasons. DM Payroll Solutions offers a garnishment feature that accurately calculates and prioritizes garnishments, produces checks and delivers them to the appropriate agency.
  2. Laws regulating garnishments vary by state. In addition to being governed by the federal Consumer Credit Protection Act, garnishments are subject to varying state laws. This means employers often must be familiar with laws in the jurisdictions where they do business, as well as the state in which a judgment is registered.
  1. You can’t discriminate against an employee due to a wage garnishment. Federal law prohibits discrimination, including terminating an employee whose earnings are subject to garnishment for any one debt. However, the law does not protect employees subject to multiple garnishments. As in 2 above, varying state garnishment laws also apply, further complicating matters.
  2. Federal law limits the amount that can be garnished per workweek or pay period. For ordinary garnishments (i.e., those not for support, bankruptcy or any state or federal tax), the weekly amount may not exceed the lesser of two figures: 25 percent of the employee’s disposable earnings, or the amount by which an employee’s disposable earnings are greater than 30 times the federal minimum wage (currently $7.25 an hour).

In closing, wage garnishment law is complex and the costs can be high. Be sure you have procedures in place to dictate how garnishments are handled from the time you receive a court order through garnishment end.


Sources: U.S. Department of Labor