Employer Guide to Processing Wage Garnishments
How to properly handle wage garnishment orders, including child support, tax levies, and creditor garnishments, while complying with federal and state law.
AEA Editorial Team
Employer Obligations
When you receive a wage garnishment order, you are legally required to comply. Failing to withhold and remit the required amounts — or withholding the wrong amounts — can make you liable for the full amount that should have been garnished, plus penalties.
Garnishment orders come from courts, government agencies, and child support enforcement offices. They are not optional. You cannot ignore them, negotiate them on the employee's behalf, or allow the employee to opt out.
Types of Garnishments
Child Support Orders
Child support withholding orders are the most common type of garnishment. They are typically issued using an Income Withholding for Support (IWS) form. Federal law requires employers to begin withholding no later than the first pay period after the date specified on the order. Remit the withheld amount to the state disbursement unit identified on the order.
Federal Tax Levies
The IRS issues levies through Form 668-W. Unlike most garnishments, the amount exempt from an IRS levy is calculated based on the employee's filing status and number of dependents. The employee must complete the Statement of Exemptions on the form. If the employee fails to complete it, you must calculate the exempt amount as if the employee is married filing separately with no dependents.
State Tax Levies
State tax agencies issue their own garnishment orders, often with different procedures and calculation methods than federal levies.
Creditor Garnishments
Courts issue garnishment orders on behalf of creditors — credit card companies, medical providers, landlords, and others who have obtained a judgment against the employee. State law governs the procedures and limits for these garnishments.
Student Loan Garnishments
The federal government can garnish wages for defaulted federal student loans through administrative wage garnishment, without obtaining a court order. The maximum is typically 15 percent of disposable earnings.
Federal Limits on Garnishment
The Consumer Credit Protection Act (CCPA) limits how much of an employee's disposable earnings can be garnished:
- Creditor garnishments: The lesser of 25 percent of disposable earnings or the amount by which disposable earnings exceed 30 times the federal minimum wage per week.
- Child support: Up to 50 percent of disposable earnings if the employee is supporting another spouse or child, or 60 percent if they are not. An additional 5 percent is allowed if payments are more than 12 weeks in arrears.
- Federal tax levies: The amount specified by the IRS levy tables — there is no percentage cap.
Disposable earnings means gross pay minus legally required deductions (taxes, Social Security, Medicare, and mandatory state deductions). Voluntary deductions like retirement contributions and health insurance premiums are not subtracted.
State laws may provide lower garnishment limits than the federal CCPA. You must apply whichever limit is more protective of the employee.
Priority of Multiple Garnishments
When you receive multiple garnishment orders for the same employee, priority rules determine the order of withholding:
- Child support orders generally take first priority
- Federal tax levies
- State tax levies
- Federal student loan garnishments
- Creditor garnishments
If the total of all orders exceeds the maximum allowable garnishment, satisfy higher-priority orders first and apply any remaining capacity to lower-priority orders.
Anti-Retaliation Protections
Federal law prohibits terminating an employee because their wages are being garnished for a single debt. Some states extend this protection to multiple garnishments. Terminating an employee to avoid the administrative burden of processing garnishments exposes you to legal action.
Practical Steps
- Designate a single point of contact for receiving and processing garnishment orders — typically someone in payroll.
- Respond promptly. Begin withholding on the pay period specified in the order. If there is a deadline to file a response or answer with the court, meet it.
- Calculate correctly. Use the right definition of disposable earnings and apply the correct limits.
- Remit on time. Send the withheld amounts to the designated payee by the deadlines specified in the order.
- Notify the employee. Inform the employee that you have received the order and will be making deductions from their pay.
- Maintain records. Keep copies of all garnishment orders, calculations, and remittance records.
- Track terminations and changes. If the employee leaves or is terminated, notify the issuing agency or court as required by the order.
Garnishment processing is administrative but carries real legal risk. Systematic procedures and careful attention to calculation rules are your best protection.