What Every Employer Should Know About GarnishmentsHR Resource
May 29, 2012 — 2,225 views
According to The United States Department of Labor, a wage garnishment is a legal procedure that withholds a certain amount of a person's employment earnings to be paid toward a debt. The employer withholds the earnings typically by order from the court. Wage garnishments may also be ordered for a debtor who has unpaid taxes to the IRS or state tax collection agency, notes the source. Finally, a wage garnishment may also be a result of non-tax owed money to the federal government.
The Title III of the Consumer Credit Protection Act regulates how much of an employee's earnings can be withheld for garnishments and protects all people with personal earnings including salaries, wages and bonuses. People in each state, the District of Columbia and all United States territories are subject to this wage garnishment under this federal law.
People who fall under wage garnishment typically have failed to meet legal obligations and must then pay back the money owned a little at a time through withholdings from each paycheck. In addition to unpaid federal and state taxes, these legal obligations might also include student loan default, unpaid medical and legal bills, child support and bankruptcy proceedings.
American Express explains that if an employer receives a notice for an employee wage garnishment, it's important that the employer does not ignore the notice as the employer can then be held liable for any amount that was ordered to be withheld. An employee should know wage garnishment was going to occur because he or she has been informed well in advance about the process by the court or IRS, states the resource. However, it may be a good idea for an employer to send a formal letter to the employee stating the company has received the notice and how much will be withheld each paycheck.
An employer should also note that it is unlawful to fire an employee due to wage garnishment if it is the result of a single debt. Employee dismissal is only permitted if an employer receives notice for the garnishment of two or more debts. Furthermore, an employer can not invoke disciplinary action on an employee or refuse to hire an employee because of wage garnishment. Employers who violate these protective regulations could be subject to fines, imprisonment or both. An employer should make sure in-house procedures for wage garnishments are up-to-date and be able to conduct the timelines of doing so.