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Child Support and Other Wage Garnishments — Your Questions Answered

Part of a series  |  Wage Garnishment Insights

Hannah Beppel

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Staying current on wage garnishment legislation can be overwhelming. Laws vary across state lines and lien types. Employers should know there are potentially severe consequences for noncompliance with state and federal wage garnishment laws, and that's why education is crucial.

Experts Robyn Large — task lead on the employer services team, Federal Office of Child Support Enforcement (OCSE) — and Corri Flores — director of government affairs at ADP — came together to help identify big-ticket legislative updates and best practices. Both were part of ADP's on-demand webcast that covers wage garnishment basics, compliance updates, and how updated legislation may impact your organization.

Launch it here: The World of Wage Garnishments: Exploring the Basics, Compliance Updates and Trends.

What is a Wage Garnishment?

A wage garnishment is a court order directing a third party (like an employer) who holds money belonging to a defendant (like an employee) to withhold funds from the defendant and then turn those funds over to the third party so they can be provided to the party they are owed to. It's helpful to remember that the purpose of wage garnishment is to collect on a debt or funds owed based on an agreement or order the employee is subject to. These types of deductions are involuntary, which means the employee cannot opt out based on their preference. If an employee requests that the deductions be stopped or paused and there is an order instructing you as the employer to withhold wages, the answer is no. An employer is legally obligated to garnish a portion of the wages based on the garnishment order and can face liabilities and penalties for not processing or incorrectly processing wage garnishments.

Is there a limit to how much money can be garnished from employee wages?

Yes, and that limit is based on The Federal Consumer Credit Protection Act (CCPA), which provides basic employee protections and outlines the maximum withholding limit for consumer debts and child support obligations. This act not only protects employees' wages but also protects the employees' jobs, outlining that an employee cannot be fired because of a single garnishment. But state laws also need to be considered when determining the maximum garnishment limits allowed.

What if the state and federal garnishment laws are different?

Both state and federal laws must be considered, but if the state and federal garnishment laws are different, then state law is to take precedence when it is more favorable to the employee whose wages are being garnished. Corri Flores reminds us, "Garnishments abiding by the state limits cannot exceed the federal limit but can be lower than the federal limits." When setting up garnishments, it is also important to remember that multiple factors are at play, like disposable earnings, which garnishments have priority if there are multiple and whether multiple are allowed, etc. It is best to consult with legal counsel for compliance direction.

What are the most common wage garnishments?

Child support garnishments are usually the most common, but other garnishments like creditor garnishments (traditionally related to consumer debt), student loan payments, bankruptcy orders and tax levies are also common. Each of these types of wage garnishments is required by law to be deducted from the pay of the employee who incurred the debt.

Is a voluntary wage assignment the same as a wage garnishment?

No, a voluntary wage agreement is not the same as wage garnishment. A voluntary wage agreement is an arrangement an employee makes with their employer, typically involving a signature from the employee documenting their consent to wage deductions until a set dollar amount is reached so that the funds can be sent to a third party. Employers are within their rights to decline to allow voluntary wage assignments, and since the employee has elected to set up these deductions, they can request their employer to stop them at any time. A wage garnishment, on the other hand, is involuntary. This means that employees cannot opt out of these deductions from their pay. These amounts are set and required by law to be deducted from the employee's pay and turned over to the creditor agency.

What if I don't withhold a garnishment from my employee's pay?

Employers can face financial penalties or consequences for failure to withhold a wage garnishment. In Illinois, an employer who fails to properly implement a child support order could be penalized 100 dollars per day per deduction. In Virginia, if an employer fails to appropriately respond to or process a creditor garnishment, they could be liable for the entire debt of that specific garnishment. You may think, "Well, I'm not in Illinois or Virginia, so I have nothing to worry about." But laws vary by state, so it is essential to know your state and federal obligations about garnishments to avoid penalties and fines associated with non-compliance.

How do I know if my organization is complying?

A legislative monitoring tool that can monitor your organization's wage garnishments is incredibly helpful in ensuring that your company complies with state and federal laws. Corri Flores, director of government affairs at ADP, recommends "having a legislative monitoring tool is very beneficial for helping employers know when new legislation is being introduced, when it's passed and what changes they need to make in their systems to comply." Staying up to date is challenging enough with changing legislation. Implementing a software tool programmed with new legislative updates as they are released is one of the best ways to stay on top of compliance.

Do I have to report newly hired employees?

Yes, it's required by law to report your newly hired employees to the state new hire reporting agencies within 20 days of hire. This is important for child support agencies to locate child support obligors when they change jobs. Once reported as a newly hired employee, the child support agency is able to issue an income withholding order to the employer for the child support obligation.

Can I remit child support payments for employees electronically?

Yes, all states have electronic options, but it is essential to remember that not all garnishments are remitted to the same place. You can refer to the actual garnishment order to determine where to submit the payment. Robyn Large, task lead on the employer service team at the Federal Office of Child Support Enforcement, reminds employers that they can also sign up to receive all child support orders electronically: "There are lots of benefits to the electronic income withholding order — it reduces the paperwork and especially for big companies that have many withholding orders, it makes the turnaround time so much faster." She says there's also an increased level of consistency with electronic filing: "With paper orders, you'll get pages and pages of cover sheets, but with the electronic one, everything is uniform, and states cannot modify it, so you're getting one standard form every time, and that increases accuracy and reliability so much."

The wrap-up: Complying with wage garnishment laws

Complying with wage garnishment laws means understanding what they require and how they impact your employees and payroll. For more insights on this topic, launch this on-demand webcast anytime: The World of Wage Garnishments: Exploring the Basics, Compliance Updates and Trends.