FAQs For Garnishments And Levies
Garnishment and Levy FAQs for Payroll Professionals
Garnishments are an important responsibility for payroll professionals. When an employer receives a valid garnishment order, the payroll department may be required to withhold money from an employee's earnings and remit it to a government agency, court, creditor, or other authorized recipient.
Processing garnishments correctly requires careful attention to the order, applicable federal and state requirements, withholding calculations, employee records, payment deadlines, and documentation.
The Garnishment FAQs from Payroll Training Center answer common questions about wage garnishments, child support orders, tax levies, creditor garnishments, student loan garnishments, withholding limits, disposable earnings, employer responsibilities, and payroll compliance. Note that garnishment requirements vary depending on the type of debt, the issuing agency or court, and applicable federal, state, and local law. The information below is therefore for general educational purposes and should not be considered legal advice.
Common FAQs for Garnishments and Levies
What is a wage garnishment?
A wage garnishment is a legal procedure requiring an employer to withhold some portion of an employee's earnings to satisfy a debt or other legal obligation. Garnishments can arise from court orders, child support orders, tax levies, federal agency actions, and other legal procedures.
What is a tax levy?
A tax levy is a legal action by a taxing authority to collect an outstanding tax obligation. Payroll departments may receive tax levy orders requiring withholding from an employee's wages.
Who issues a garnishment order?
Depending on the type of garnishment, an order may originate from:
- A court
- A state child support agency
- The Internal Revenue Service
- A state or local tax authority
- A federal agency
- Another authorized government or legal entity
What types of garnishments can payroll departments receive?
The rules governing each type can be different, but common types include:
- Child support orders
- Alimony or spousal support
- Creditor garnishments
- Federal tax levies
- State and local tax levies
- Federal agency garnishments
- Student loan garnishments
- Bankruptcy-related withholding
Why do employers have to process garnishments?
When an employer receives a valid garnishment or withholding order, the employer may have a legal obligation to withhold the required amount from the employee's wages and send the money to the appropriate recipient.
Can an employer ignore a garnishment order?
Generally, employers must comply with valid garnishment orders according to applicable requirements. Failure to properly process an order can expose an employer to additional compliance problems.
What should a payroll department do when it receives a garnishment order?
The exact procedure depends on the order and applicable law. Generally, a payroll department should:
- Review the order promptly.
- Confirm that it applies to the employee.
- Identify the type of garnishment.
- Determine the effective date.
- Review the withholding instructions.
- Determine the applicable withholding calculation.
- Establish the garnishment in the payroll system.
- Withhold the required amount.
- Remit payments as required.
- Maintain appropriate records.
- Monitor subsequent notices or changes.
Should payroll verify a garnishment order?
Yes. Payroll professionals should review the order carefully to ensure that the employee information, effective date, withholding instructions, payment recipient, and other relevant information are properly entered into the payroll system.
Should the employee receive a copy of the garnishment paperwork?
Requirements vary by the type of garnishment and applicable jurisdiction. Payroll professionals should follow the instructions in the order and applicable federal and state requirements regarding employee notices and copies of garnishment paperwork.
Does a garnishment mean an employee has done something wrong?
Not necessarily. A garnishment simply means that a legal process has been initiated to collect a debt or enforce an obligation. Payroll professionals generally should not make assumptions about the employee's circumstances.
What is a child support garnishment?
A child support garnishment, commonly referred to as income withholding for child support, requires an employer to withhold specified amounts from an employee's earnings and remit them for child support obligations. Child support withholding is subject to rules that differ from ordinary consumer-debt garnishments.
What is a creditor garnishment?
A creditor garnishment generally involves withholding wages to satisfy a debt owed to a creditor after the applicable legal process has been followed.
What is a tax levy?
A tax levy is a legal collection action used by a taxing authority to collect unpaid taxes. Federal and state tax levies can have different rules from ordinary creditor garnishments.
What is a student loan garnishment?
Certain federal student loan debts may be collected through administrative wage garnishment. Federal law provides specific rules governing these garnishments, including applicable withholding limitations.
What is a federal agency garnishment?
Certain federal agencies may use administrative wage garnishment procedures to collect qualifying non-tax debts owed to the federal government. The applicable rules depend on the type of debt and agency involved.
How much of an employee's wages can be garnished?
For ordinary garnishments, Title III of the Consumer Credit Protection Act caps withholding at the lesser of 25 percent of disposable earnings, or the amount by which disposable earnings exceed 30 times the federal minimum wage for the week. With the federal minimum wage at $7.25, that protected floor is $217.50 per week. State law may protect more, and where it does, the employee gets the greater protection.
Can more than one garnishment be processed at the same time?
Potentially, but the employer must apply the applicable federal and state rules concerning withholding limits and priority. The federal CCPA does not establish all garnishment priority rules; those priorities can be determined by state or other federal law.
Are the limits different for child support?
Yes, and they are higher: generally up to 50 percent of disposable earnings if the employee supports another spouse or child, and 60 percent if not, each increased by 5 percent - to 55 and 65 percent - when payments are more than 12 weeks in arrears. Child support orders are also exempt from the ordinary 25 percent cap.
How is an IRS levy calculated?
Differently from every other garnishment. Rather than capping the amount taken, a federal tax levy leaves the employee an exempt amount based on filing status and dependents, using IRS-published tables, and takes everything above it. Employers frequently apply the 25 percent CCPA cap to a federal levy by mistake, which under-remits and leaves the employer exposed.
What about student loan garnishments?
Administrative wage garnishment for defaulted federal student loans is generally limited to 15 percent of disposable pay, with its own notice and hearing procedures. It does not require a court judgment, which surprises employers receiving one for the first time.
What should an employer do the day a garnishment order arrives?
Date-stamp it, verify the employee is currently employed, calendar the response deadline — many orders require an employer answer within a short window — determine the order type and its priority against anything already in place, notify the employee, and begin withholding from the first pay period after the effective date specified. Missing the answer deadline is what most often creates employer liability.
What happens if multiple orders arrive for the same employee?
Priority rules govern. Child support generally takes first priority; federal tax levies generally rank by the date received relative to other orders; creditor garnishments typically follow in order of receipt; and the aggregate withheld remains subject to the applicable caps. When the total exceeds what may lawfully be withheld, the lower-priority order is paid partially or not at all, and the issuing party should be notified.
Can an employee be fired for having a garnishment?
Federal law prohibits discharging an employee because of a garnishment for any one indebtedness. That protection is per-debt at the federal level — protection for a second garnishment depends on state law, and several states extend protection further. Terminating an employee with multiple garnishments therefore requires checking the specific state.
Can an employer charge the employee an administrative fee?
Sometimes. Many states permit a small per-payment fee for processing garnishments, and the permitted amount and the order types it applies to vary by state. Where a fee is allowed it typically may not push the employee below protected minimums.
How long does a garnishment last?
Until the debt is satisfied, the order is released or terminated by the issuer, or the order's stated duration expires - which varies by type and state. The employer's obligation continues until it has a release; assuming a garnishment has ended because payments have run a long time is not a defense.
What if the employee no longer works here?
Notify the issuing court or agency promptly, in the manner and time the order specifies, including the termination date and, where required, the employee's last known address and any new employer information. Silence is treated as non-response, which is the same exposure as ignoring the order.
How should garnishment orders be stored and protected?
As confidential payroll records with restricted access. Garnishment information is sensitive, disclosure to coworkers creates real legal exposure, and several states have specific confidentiality requirements. Keep documentation of the order, the calculation, every remittance, and the eventual release - the release is the document employers most often fail to retain.
Where do state-specific rules apply?
Nearly everywhere: protected amounts, permissible fees, response deadlines, priority beyond federal rules, and anti-discharge protections are all state-driven. Our state-by-state garnishment pages cover the specific requirements for each jurisdiction, and multi-state employers should confirm the rule for the state where the employee works rather than where the company is headquartered.
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There are lots more details with regard to garnishments. For instance:
- How much can an employer garnish from an employee's paycheck?
- What are disposable earnings?
- Are voluntary deductions subtracted when calculating disposable earnings?
- How much can be garnished for child support?
- Does the 25% garnishment limit apply?
- Can a bonus be garnished?
- Can commissions be garnished?
- Can severance pay be garnished?
- Can vacation or accrued leave payouts be garnished?
- Can retirement income be garnished?
Most of these questions are too detailed and complex to answer in an FAQ. As such, we suggest that you take one of the recommended training courses that appear below.
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