Wage garnishment is an issue that every employer will face at some point, but many employers know little about it. However, it is a key aspect of payroll that employers will need to familiarize themselves with, so here’s a mini lesson on wage garnishment.
How Wage Garnishment Works
Wage garnishment occurs when a part of a worker’s salary is seized to pay for a debt that is owed. There are a number of things which could trigger it, such as child support, loans which the employee has failed to pay, or alimony. It is the responsibility of employers to seize the necessary funds and transfer them to the correct party. Employers who fail to do so could themselves be held liable.
The larger a company becomes, the more likely wage garnishment notices will be received. While established companies are familiar with the process and know what to do, for small business owners there is a bit of a learning curve and adjustment to the process.
Can Employees Be Fired When Their Wages Are Being Garnished?
Employers cannot fire employees in cases where their salaries are being garnished for debts which are solitary. However, an employee may be terminated in a situation where they receive more than one garnishment. Due to the fees which are attached to the garnishing of wages if there are multiple garnishments an employer is justified in terminating the employee or making them cover the cost.
Which Salaries Are Subject To Garnishment And In What Amounts?
The guidelines established under the Consumer Credit Protection Act state that the amount seized in a garnishment is dependent on an employee’s gross earnings as well as the state in which they are employed. The percentage will vary from one employee to another but the average comes to approximately 15 percent, but not more than 65.
How Should Employers Respond When Receiving A Garnishment Notice?
Most employers will not be pleased to receive a notice of wage garnishment, nor should they be. An employee that is having their wages garnished, either due to child support, alimony or debts is clearly acting irresponsibly in their personal life and these actions have affected their professional life and income.
Upon receiving notice of wage garnishment, an employer is obligated by law to notify their employee. They must also notify the human resources department as well as payroll regarding the court order, which ensures that they will know specifically how much should be removed from each check, as well as the length of time the garnishment will remain in effect. Once each party has been notified, the garnishment will begin and the employer will be responsible for remitting payments to the receiving party until the entire debt has been paid.
Wage garnishment is an unpleasant situation for employers and an even more unpleasant situation for employees. Unless you are using the help of software, managing payroll in general can be stressful, and wage garnishment only makes it more difficult. Perhaps the most serious part of it is that employers themselves can be targeted if they don’t follow through for the process.