In this article, we take a look at garnishment compliance trends and how wage garnishments work.
We receive a lot of questions from small business owners about employment issues.
One of the more common questions is: If I am asked to garnish my employees wages, do I have to do it?
This is a common question because wage garnishment is itself quite common these days. In fact, HR experts indicate that 5% of employees have their wages garnished. Moreover, it's very common for an employee who has a wage garnishment to have multiple wage garnishments.
Regarding the question of whether an employer needs to comply with a wage garnish request, the answer is: Absolutely.
In fact, there are penalties for non-compliance and those penalties are rising. Penalties are not limited to monetary fines. There are some scenarios in which you can be imprisoned for non-compliance on wage garnishment
Why Garnishment Non-Compliance Penalties Are Rising
We can understand why penalties are on the rise by looking at what's happening overall with wage garnishment trends.
There are many reasons for a wage garnishment but one garnishment trigger that seems to be increasing is wage garnishments related to child support.
At the same time, the federal government has reduced the funding for states to collect child support. As a result, states are still responsible for collecting child support, have limited funds to do so, and they therefore need to lower their costs associated with collecting child support.
The answer is to impose stiff penalties on employees to encourage full compliance without having to continuously poke and prod an employer to garnish the employee's wages.
So, now you understand why there are now higher penalties for wage garnishments, but how big can a wage garnishment penalty be exactly?
What Are Penalties For Not Deducting Employee Wages for a Garnishment?
Many employers believe that they can never be held liable for all of the outstanding garnishment amount for incorrect or late processing of garnishment orders.
This is actually not true. As an employer, you can be held liable for the full garnishment amount, plus other expenses such as the costs of litigation.
What is Garnishment Wage Withholding?
Wage garnishment occurs when an employer receives a court order directing them to withhold money or property belonging to a defendant.
The reason we have wage garnishments are that they are an effective way to collect on debts.
Parties that are owed money will go to court and, if the plaintiff prevails, the judge will issue a wage garnishment, which helps to ensure that the debts are paid. In addition, government entities can also initiates wage garnishments for things like unpaid taxes or unpaid parking tickets. This can be from federal, state or local government agencies.
It might not surprise you to know that there are a number of laws that regulate wage garnishments. For example, regulations limit the amount of earnings that may be garnished. They also protect employees from being fired if their wages are garnished.
How to Handle a Wage Garnishment Request
As an employer, it's likely that over time you will receive a wage garnishment notice for one of your employees. The garnishment might be for child support, unpaid taxes, student loans, unpaid rent or any other number of situations.
When you are asked to garnish wages, the request comes in the form of a "writ". Typically, you'll need to start garnishing wages and paying on the writ as soon as you receive it. You will also likely need to send back a response form. The rules vary from state to state, but typically the instructions on the wage garnishment request will tell you exactly what you need to do.
If you are confused on how to handle a wage garnishment, perhaps because you receive several for a single employee, it's a good idea to seek legal counsel.
Don't mess around with wage garnishments. As mentioned above, you can be held liable for any amount that you should, but don't, withhold. As such, it's best to handle all wage garnishments in an expeditious manner that complies with local, state and federal laws.