If you’ve received a court order for either a garnishment or child support for one of your employees, it’s important to handle these communications timely and correctly.
Garnishments and child support orders are issued by the court and sent to the employer in order to start the calculation of the deduction of these items from the employee’s wages. It is very important to read the details in their entirety and then communicate to the entity designated in the order. Each state has different rules for wage garnishment limitations. If the federal law is different than the state law, the employer is responsible for following the state laws that require the lesser garnishment.
Child support typically takes priority over garnishments and there is a limit to what the employer can deduct from disposable earnings. The calculations and communication can be confusing, especially if there is more than one order.
If you are utilizing a payroll company, they should be able to set up the calculation for you to be automated. However, be sure to send in the entire court order – all pages – originals or encrypted .pdf files are ideal for clarity. Be sure to keep a copy on hand for your records and notify the employee in writing that you have received the order.
As the payments are sent in, there may be coupons that will need to accompany the payment that will outline how the payment was calculated (typically after disposable earnings). If the employee did not earn enough during that pay period to trigger the garnishment, communication will still need to go to the entity explaining this.
Once the debt is paid in full or has been ordered to stop, there will be an official letter (depending on the type of order) that will release the requirement. Employers should not stop any garnishment deductions until officially ordered to do so or they will risk possible penalties and fees.