Wage garnishments are something employers encounter only sometimes, but it’s essential to have a plan in place and know what to do when the time comes. It’s good to consult a professional to ensure your policies and procedures are legal.
Employees whose wages are garnished should receive a notice from the creditor detailing what they need to do. It includes information about the type of debt garnished and how much of their disposable income is being withheld.
What is garnishment?
A garnishment is when your employer sends part of your paycheck to a creditor to help pay off a debt you owe. It usually happens after a creditor sues you and wins in court, but it can also happen if a court orders it without a lawsuit (like in the case of back taxes or child support). Depending on your state and type of debt, there are different rules and limits on how much of your earnings can be garnished.
Once a garnishment is in effect, your pay stub will show a line item with “Garnishment” next. You can also check online whether you have a garnishment balance. If you do, it’s crucial to understand how it works and how the amount is calculated.
As an employee, you can usually file an objection to the garnishment if there’s an error or you think it’s too much. But you have to act quickly; typically, there’s only a window of a few days or weeks before your employer starts taking money from your paycheck.
Workers can also switch jobs to escape garnishment, although this doesn’t always work because creditors must find out who a debtor’s new employer is and repeat the process. It can take time and effort, and workers may not be able to afford to wait for it.
How does it work?
Creditors seeking wage garnishment must file a lawsuit and win a judgment against the employee. The court then issues an order, known as a Writ of Execution, to the employer to withhold specific amounts of money from an employee’s paycheck and send those funds directly to the creditor.
The amount that can be garnished is based on federal and state law. For example, in New York, employers can only garnish up to 30 times the maximum weekly minimum wage after subtracting mandatory deductions such as federal and state income tax, FICA, and the employer’s portion of workers’ compensation insurance. Other mandatory deductions, such as child and spousal support, are also taken from an employee’s disposable income.
Generally, the first creditor to receive a wage garnishment gets all the money until it is paid in full. However, employees for whom multiple creditors owe money can arrange repayment plans with each one to reduce the amount that is withheld from their paychecks.
The research conducted by DeFusco and his associates provided insightful data on the frequency and severity of garnishment. However, more specific information is required to comprehend how an employee’s likelihood of suffering a wage garnishment payroll is influenced by their race, education, and area. As this study develops, authorities and corporations can create more focused policies that safeguard employees and foster financial stability.
What are my rights as an employee?
A creditor can garnish an employee’s earnings by court order if the debt is considered “public debt.” Public debt includes:
- Federal, state, or local taxes.
- Unpaid child support, alimony, or other court-ordered support.
- Student loans.
- Credit card debt.
The amount that can be garnished is based on the type of debt and how much money the debtor earns. In some cases, the amount taken from an employee’s paycheck can be up to 50 percent of their disposable earnings, depending on the type of debt and whether they are supporting a spouse or children.
A garnishment order must be sent to the employer by a court or government agency, and the employer must follow the rules and regulations set out in the order. Sometimes, an employee can challenge the order in a court of law.
Employers are prohibited from retaliating against employees who have to deal with wage garnishment, and the laws on this issue vary from state to state. Employees should consult with a lawyer to understand their rights and protect themselves from unfair treatment in the workplace. Employees also have rights when it comes to reporting violations committed by their employers, and they can seek compensation through a discrimination or retaliation claim. In addition, employees need to understand their right to collective action, such as organizing, engaging in bargaining, or participating in a union.
What are my responsibilities as an employer?
You may legally be obligated to honor wage garnishment orders as an employer. Whether the garnishment comes from a federal or state court, you must follow their rules and regulations. It is also important to note that you cannot work around wage garnishment laws by paying employees ” under the table” or classifying them as contractors instead of employees. Doing so can put you in significant liability for severe legal repercussions.
The amount of money that can be garnished varies by state and the type of debt paid. For example, student loans can only be garnished up to 15 percent of an employee’s disposable earnings, while child support can be up to 65 percent. Other debts that can be garnished include unpaid federal, state, and local taxes and past-due public debts. The limits for these types of garnishments are based on an individual’s disposable income, which is the amount of their paycheck remaining after mandatory deductions (such as insurance premiums and union dues) have been withheld.
Your employees may want to contact their creditors directly if they have questions about the garnishment or want to work out a different payment plan. While you are not allowed to interfere with those conversations, it is a good idea for your employees to keep you updated on any changes or concerns.