Garnishment is the process of taking money from an employee's paycheck to pay off a debt that the employee owes. The garnishment is usually the result of a court order or a tax collection. The employer is required to cooperate with a wage garnishment order.
In garnishment, the employee has the money owed deducted from his or her paycheck until the debt is paid off or until the employee makes other arrangements to pay off the debt. Certain limitations on garnishment exist.
For example, unless there are exceptional circumstances, 50% of the employee's paycheck is the limit for garnishment for child support if the employee has another spouse or child to support. Without a spouse or another child, the limit is raised to 60% and another 5% can be deducted for back payments. Here are more details about garnishment amounts and percentages.
Various states have their own guidelines for wage garnishment. These guidelines may limit the reasons for which an employee's wage may be garnished. They may stipulate a different maximum garnishment than the Federal law. They may exempt employees from garnishment because of certain responsibilities for child support and other restrictions.
Because employers must follow legal guidelines in garnishment, employers must know the laws in their state about garnishment. Because employers are often faced with multiple garnishment orders for a particular employee, knowing the maximum amount that can be deducted from an employee's wages is critical. Knowing the order in which creditors must be paid is important, too.
For example, if an employee was experiencing garnishment for Federal taxes, state taxes, and credit card debt, the employer would pay in that order until the maximum percentage was reached.
Garnishment most frequently occurs for unpaid but owed:
- child support,
- student loans, and
- Federal, state, and local taxes.
An employer is informed of garnishment requirements by the arrival of a legal document or court order with deadlines stipulated for garnishment. As a courtesy, I recommend letting the employee know that you have received a garnishment order. This allows the employee to know prior to the receipt of a reduced amount of compensation in his or her paycheck.
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