Wage Garnishment: What Employers Need to Know
Understanding Wage Garnishments
Receiving a wage garnishment order can be daunting for small business owners. Understanding your obligations is critical to avoiding liability. Legal Obligation: As an employer, you are legally compelled to withhold a portion of an employee's earnings to satisfy a debt or court order.
Types of Garnishments
It is important to distinguish between the types of orders you may receive:
- Child Support: Often takes priority over other debts.
- Tax Levies: Issued by federal or state agencies.
- Creditor Garnishments: Stemming from unpaid consumer debt.
Administrative Best Practices
First, verify the validity of the order. Second, ensure your payroll software is configured to prioritize deductions correctly based on the Consumer Credit Protection Act (CCPA) limits. Never penalize or retaliate against an employee for a garnishment; federal law strictly prohibits termination based on a single garnishment order.
Maintaining Compliance
Keep detailed records of all payments made to the courts or agencies. If an employee challenges the garnishment, direct them to the issuing agency—do not attempt to mediate legal disputes yourself.