Garnishments and Attachments Step by Step Guide

REVIEW FEDERAL LAW Employers are required to comply with employee wage garnishment requirements For example, the Consumer Credit Protection Act (CCPA)
REVIEW STATE LAW

Be certain to be up-to-date on state law

 

Garnishment law varies between states

A wage garnishment, otherwise known as a wage attachment or income execution, occurs when an employer must withhold the earnings of an individual for the payment of a debt pursuant to court order, IRS finding, or state tax collection
DISCUSS ISSUE WITH EMPLOYEE Tell employee to work out issues with the creditor or the court Employers should explain that they are being ordered to have to garnish wages by the court order
DON’T FIRE THE EMPLOYEE State and federal laws protect employee from termination for garnishments The CCPA and state laws prohibit employers from firing employees because of single garnishment or multiple garnishments for a single indebtedness
REVIEW ALL DOCUMENTATION Review garnishment order carefully Protocol varies by state as to procedures and the amount that can be withheld
    Note the deadlines for response and the amount to be withheld
DO NOT IGNORE THE ORDER Employers frequently fail to respond to the garnishment

Employers frequently receive a garnishment for a former employee or the employee does not earn enough money

 

As a result some employers think that they are not required to respond to the court

  Always answer the garnishment

Respond to the order and explain the circumstances

If a garnishment is ignored, the employee’s debt can become employer’s liability via default judgment.

UNDERSTAND THE TYPE OF GARNISHMENT INVOLVED Types of Garnishment

·         Wage Garnishment

·         Attachment

·         Military Garnishments

·         IRS Garnishment

  An order for a non-continuing garnishment mandates a single payment, even if it is  less than the amount sought An order for continuing garnishment remains in effect for 180 days, and there are a series of garnishment payments
THE AMOUNT WITHHELD Wage garnishments may have different criteria. The amount legally subject to garnishment is typically derived from an employee’s disposable earnings (the amount left after legally required deductions are made)
   

Title III of the CCPA says that the maximum amount to withhold is whichever is less between:

(i) 25% of disposable earnings; or

(ii) the amount by which disposable earnings exceed 30 times the federal minimum wage

  Determine the type of indebtedness associated with the garnishment because the amount of disposable earnings subject to garnishment can vary “Disposable earnings” is defined as wages minus legally required withholding
  Note that there are exceptions: bankruptcy court, federal or state tax levies, and child support For example, the CCPA allows up to 50% of an employee’s disposable earnings to be garnished if the employee is supporting a current spouse or child… up to 60% otherwise
    California permits the maximum garnishment of 50% of disposable income, and this includes tips paid directly to an employee
    If state wage garnishment law differs from the federal law, the law with less garnishment is to be observed
PRIORITY OF MULTIPLE GARNISHMENTS Contact the garnishing agencies for the priority when there are more than one garnishment

 

For example, in most situations, these priorities apply in the State of California:

1.      Court-ordered Child or Spousal Support

2.      IRS & State Tax Levies

3.      State Non-Tax Levies

4.      Civil Judgements

  States have the ability to preempt some garnishment priorities  
   

Multiple garnishments can be in place at the same time as long.

California limits the amount  garnished in total to no more than 25% of the employee’s disposable earnings

SET UP PROCEDURE TO IDENTIFY WAGE GARNISHMENTS Route wage garnishments directly to the person responsible for ensuring compliance  
  Train supervisors to immediately forward wage garnishment orders to Payroll Department or to HR  

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