Employer Guide to Processing Wage Garnishments

Wage garnishments are court-ordered or government-ordered deductions from an employee's pay to satisfy a debt. Employers are legally required to comply with garnishment orders and can face penalties for failing to do so. Understanding the process and limits protects your organization from liability.

Types of Garnishments

The most common types of wage garnishments employers encounter include:

• Child support orders: Issued by state agencies or courts, these take priority over most other garnishments
• Federal tax levies: Issued by the IRS for unpaid federal taxes
• State tax levies: Issued by state tax agencies
• Creditor garnishments: Court orders for unpaid debts such as credit cards, medical bills, or loans
• Federal student loan garnishments: Administrative wage garnishment by the Department of Education or its servicers
• Bankruptcy orders: Court orders related to bankruptcy proceedings

Federal Limits on Garnishment

The Consumer Credit Protection Act (CCPA) limits the amount that can be garnished from an employee's disposable earnings:

• Ordinary 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 and alimony: Up to 50 percent of disposable earnings if the employee supports another spouse or child, or up to 60 percent if not. An additional 5 percent is allowed if payments are more than 12 weeks in arrears.
• Federal tax levies: Follow IRS Publication 1494 tables, which consider filing status and exemptions
• Federal student loans: Up to 15 percent of disposable earnings

Disposable earnings are what remains after legally required deductions such as taxes and Social Security.

Processing a Garnishment Order

When you receive a garnishment order:

1. Verify the order is valid (issued by a court or authorized government agency)
2. Identify the employee and confirm they work for you
3. Respond to the order within the required timeframe (typically 10-30 days depending on the type)
4. Calculate the correct garnishment amount based on the applicable limits
5. Begin withholding from the employee's next paycheck or as specified in the order
6. Remit garnished amounts to the designated recipient on time
7. Continue withholding until you receive a release or the debt is satisfied
8. Notify the employee of the garnishment as required

Handling Multiple Garnishments

When an employee has multiple garnishments, priority rules apply:

• Child support generally takes first priority
• Federal tax levies typically take second priority
• State tax levies and other creditor garnishments follow
• The total garnishment cannot exceed the CCPA limits (though child support can be taken in addition to creditor garnishments up to applicable limits)

Consult the specific laws in your state, as priority rules can vary.

Employer Protections and Obligations

Key legal protections and obligations for employers:

• You cannot terminate an employee because of a single garnishment order (CCPA protection, though this does not extend to multiple garnishments under federal law—some states provide broader protection)
• You may charge administrative fees for processing garnishments in some states
• You must comply with the order even if you disagree with it
• Failure to withhold can make you liable for the amount you should have withheld
• Keep records of all garnishment orders, calculations, and payments
• Respond to interrogatories or information requests promptly