Garnishing Wages

A garnishment is a court order letting you know that a legal claim has been made against an employee’s wages. The order generally will have arisen from a legal proceeding filed by someone to whom your employee owes money.

The most common reason for garnishment is that the worker owes child support payments to a former spouse; in many states everyone who is paying child support will automatically have their paycheck garnished. But other creditors may obtain garnishments against your employee as well. If an employee is unable to pay a debt, a court can order that the amount be deducted over time from the employee’s wages. In effect, you, as the employer, will be responsible for collecting the money from the employee’s pay and getting it to the court for payment of the debt.

How does a garnishment happen? In many cases, your involvement in a garnishment case will begin not with receipt of a garnishment order, but with receipt of what is usually called a notice of garnishment. Here’s how the situation usually unfolds: a creditor wants to collect a debt from your employee. The creditor finds out that the employee may be working for you and sends you a notice of garnishment telling you of the debt and asking you to confirm that the employee works for you.

What if you get a garnishment order? Contact an attorney right away. Writs of garnishment are serious business. In some states, you have a limited amount of time to respond (sometimes just a few days) and if you don't honor the writ and begin withholding, you can be held responsible for the entire debt of the employee.

Generally, you can deduct garnishments from wages without violating the minimum wage rules because federal law treats money paid to a third party for the employee’s benefit as the equivalent of payment to the employee. However, the amount that can be garnished is limited to 25 percent of the employee’s disposable earnings (after legally required deductions like payroll taxes, workers’ compensation, or unemployment compensation premiums), or the amount by which disposable earnings exceed 30 times the current minimum hourly wage set by the FLSA (currently, that amount is $154.50).

You cannot terminate employees because their wages were garnished.

If the garnishment is issued under a state law, and that state law provides even more protection than the federal law, you have to honor these additional protections. State laws on garnishment are detailed and complex. When you talk to your attorney, be sure to ask how much can be garnished, how to deal with multiple garnishments, and what fees you can charge the employee to recover the cost of compliance.