Recordkeeping and Metrics

Purpose of Process:

Government regulations establish requirements for garnishing wages of employees. This process provides guidance on implementing garnishments and protecting the rights of the employee whose wages are being garnished.

Definitions and Overview:

Wage garnishment is a legal procedure through which wages of an individual are required to be withheld by an employer for the payment of a debt. Most garnishments are made by court order.

Title III of the Consumer Credit Protection Act protects an employee from being fired if pay is garnished for one debt and limits the amount of the employee's earnings which may be garnished. This law is administered by the Wage and Hour Division of the Department of Labor's Employment Standards Administration.

• The law prohibits an employer from firing a worker whose earnings have been subject to garnishment for any one debt, regardless of the number of levies made or proceedings brought to collect it. The law does not prohibit discharge if the employee's earnings have been garnished for a second or subsequent debts.
• The amount of pay subject to garnishment is based on an employee's "disposable earnings" which is the amount left after legally required deductions have been made for federal, state, and local taxes, Social Security, and other governmental retirement.
• Other deductions, such as those for union dues, health and life insurance, contributions to charitable causes, voluntary wage assignments, purchases of savings bonds, and payments to employers for payroll advances or purchases of merchandise, are not required by law and may not be subtracted from gross earnings when calculating the amount of disposable earnings.
• The law sets the maximum amount which may be garnished in any workweek or pay period, regardless of the number of garnishment orders received by the employer. The amount may not exceed the lesser of two figures: 25% of the disposable earnings of an employee, or the amount by which an employee's disposable earnings for the workweek are greater than 30 times the federal minimum wage (currently $7.25 an hour). For illustration, if the pay period is weekly and disposable earnings are $217.50 or less there can be no garnishment. If disposable earnings are more than $217.50 but less than $220.00, the amount above $217.50 is subject to garnishment. If disposable earnings are $220.00 or more, a maximum of 25% can be garnished. When pay periods cover more than one week, multiples of the weekly restrictions must be used to calculate the maximum amounts that may be garnished.
• In court orders for child support or alimony, the garnishment law allows up to 50% of a worker's disposable earnings to be withheld if the worker is supporting another spouse or child, and up to 60% for a worker who is not. An additional 5% may be garnished for support payments more than 12 weeks in arrears.
• The wage garnishment law does not protect the worker against court orders in personal bankruptcy cases or levies for federal or state taxes.
• If a state wage garnishment law differs from the federal law, the law resulting in the smaller garnishment must be observed.

A writ of garnishment is a legal paper that binds the employer to the creditor. The garnishment procedure begins when a creditor brings a garnishment action to court, naming the employee as the defendant and the employer as the garnishee.

• If the creditor obtains a judgment, either the court clerk or the creditor's attorney will provide the writ.
• The writ may be sent by certified mail, return receipt requested, or by personal service by the sheriff or a private certified process server.
• The writ also provides a form for computing the amount of wages subject to garnishment. A "certificate of garnishee" must be attached to the writ.
• A writ of garnishment must be served within 60 days of issue.

Recommended Steps in the Process:

1. The company receives a writ informing them of the name and location of the court issuing the writ, the creditor's and debtor's names, the debtor's social security number, the case number, the judgment date, and the amount required to satisfy the judgment.
   
   
2. The employer must inspect the writ to ensure that it is correct and valid at face value. The employer must examine his records in light of the information on the writ to check for accuracy and validity. The employer's scrutiny is confined to the writ itself, and the employer's duty is discharged once it determines that the writ complies with the statutory form and contains no irregularities.
   
   
3. The employer must answer the writ by submitting a certificate relating to the debtor's wages to the court clerk within 5 days. The employer's duty to answer exists regardless of whether or not the writ is in order. The employer must send copies of the certificate to the creditor and the employee. The employer must also notify the employee of which exemptions apply and how much of the employee's wages are exempt.
   
   
4. Within five days of receiving the writ, if the employer finds that the writ is not in proper form, the employer must mail a certificate to that effect to the clerk of the court within five days, and the writ becomes ineffective. Otherwise, the employer must surrender to the clerk the wages levied on by the writ.

Process Tips:

The employer can be personally liable to the creditor if a correct and timely answer to the writ is not made. For instance, if the employer owes any wages to the employee at the time the writ is served, the employer is liable to the creditor if any amount is paid to the employee beyond the amount of the exemption allowed by law.

If the writ is not in order, whether in content or delivery, the employer may return the certificate within 5 days to the court clerk, stating as such. By doing so, the employer nullifies the writ. Thus, if the writ contains mistakes in amounts, signatures, forms, methods of delivery, the employer can invalidate the writ.

Employers are obligated to treat garnishments confidentially and only inform employees on a need-to-know basis.  Therefore, garnishments are typically tracked in the payroll system and not in the HRIS.