Wage Garnishment – What Employers Need To Know

Posted on April 1, 2015

Payroll servicesIt should go without saying in today’s often complicated business world that the payroll responsibilities of employers are almost never as cut-and-dry as simply paying employees the money that they have earned. Life gets complicated, and so does the realm of payroll services. We should know: abc Payroll has been a premier payroll company for over 30 years. In all that time spent handling payroll in Massachusetts and other parts of New England, we have had to become experts in the finer and less common aspects of properly administrating the payroll needs of our clients. A good example of such an aspect would be dealing with an employee subject to the strict regulations of wage garnishment laws.

First of all, it is important to understand what exactly can make an employee subject to wage garnishment. There are actually several possible reasons, such as unpaid debts or child support obligations.   Whatever the reason for the garnishment order may be, the employer will receive what is known as a “Writ of Garnishment” from a court or other government agency. As soon as the employer receives the Writ, their payroll responsibilities in regards to the proper processing and administration of the garnishment are officially under way. This starts with returning the standardized response form within seven days, (even if one of the few qualified exceptions to the garnishment order applies to that particular case).

This is where things start to get complicated. As soon as the employer receives the Writ of Garnishment, they are required to start withholding the specified amount of money from every check – even if the employee chooses to dispute the Writ. In such a situation, the money must still be withheld from the employee’s paycheck, but must be sent to the court or agency which issued the Writ, instead of the original creditor, so that it can be held in trust until the dispute is resolved. Such complications are just one of the reasons why it is very important to trust your payroll services to a trusted and reliable payroll company. Employers can face disciplinary action for not appropriately handling Garnishment Orders.

So just how much is to be withheld? Each Writ of Garnishment is accompanied by a Garnishment Calculation Worksheet, which explains in mathematical detail what percentage of the employee’s pay is to be set aside for garnishment. These amounts can, and will, vary depending upon the nature of the debt in question. For example, a maximum of 25% of an employee’s disposable income can be garnished to pay commercial debts, while that number can skyrocket up to 70% for IRS-related debts. It is very important to understand and adhere to both the Writ of Garnishment and the Garnishment Calculation Worksheet exactly as specified.

The many responsibilities of an employer, not to mention the payroll company that handles their payroll services, do not end there. They must also be prepared to handle the complications of garnishment precedence that arise when an employee is subject to more than one garnishment, or if a qualified exception to the Garnishment Order exists. Furthermore, after all of that is taken care of, they must still be able to properly transition that employee’s payroll handling when the garnishment ends.

All of this makes for some very complicated work that must be taken care of with precision and detail, which is why it is in the best interest of all companies to have their payroll overseen by professionals who truly know their trade inside and out. Here at abc Payroll, we pride ourselves at being one of the finest Massachusetts-based payroll services providers. Our decades of experience speak for themselves!

Call us today at 978-251-3003 to discuss our many payroll services and how they can be used to the benefit of your business!