Wage Garnishment Compliance Checklist

Handling wage garnishments can be complicated because federal and state requirements, withholding limits, garnishment priorities, payment deadlines, and employer responsibilities vary depending on the type of order. As such, we provide a practical checklist below for reviewing garnishment orders, calculating withholding, processing payments, maintaining records, and managing changes to active garnishments.

Employers should review the applicable wage garnishment rules and requirements and verify state-specific requirements before relying on this checklist for a particular employee or garnishment order.

Why Employers Need a Garnishment Process

Garnishment errors can result in incorrect employee deductions, missed payment deadlines, penalties, employer liability, employee disputes, and additional administrative work.

Therefore, a standardized checklist that gives payroll and HR teams a repeatable process while allowing for order-specific and state-specific requirements should be incorporated into the employer's garnishment procedures. This is especially important for employers operating in multiple states because state garnishment laws and withholding requirements are not uniform nationwide.

Garnishment Order Checklist

When a Garnishment Order Is Received

Identify the Type of Garnishment

Different types of garnishments can have different withholding limits, priorities, and processing requirements. Review the applicable garnishment rules and procedures before calculating the employee's withholding.

Determine Which Laws Apply

Calculate Garnishment Withholding

Determine Disposable Earnings

Check for Multiple Garnishments

Set Up the Garnishment in Payroll

Before Each Payroll Is Processed

Remit Garnished Funds

Maintain Garnishment Records

Monitor Active Garnishments

Special Garnishment Situations

Child Support Orders

Tax Levies

Student Loan Garnishments

Bankruptcy Orders

When an Employee Leaves the Company

Employers should also review applicable final paycheck requirements when processing wages for an employee who leaves the company.

When an Employee Changes Work Location

Garnishment Compliance Review

Important Reminder

Garnishment requirements can vary significantly by state and by the type of garnishment involved. Employers should verify current federal, state, and order-specific requirements before withholding wages.

Use this checklist as a practical starting point for establishing or reviewing your organization's garnishment procedures.

Additional Info

FAQs About Wage Garnishments

What is a wage garnishment?

A wage garnishment is a legal process requiring an employer to withhold a portion of an employee's earnings and remit the funds to a court, government agency, creditor, or other authorized recipient.

Does every garnishment have the same rules?

No. Ordinary creditor garnishments, child support, alimony, tax levies, student loan garnishments, bankruptcy orders, and other government collections may have different withholding limits and processing requirements.

How much can an employer garnish from an employee's paycheck?

The amount depends on the type of garnishment and the applicable federal and state requirements. Employers should calculate disposable earnings and verify the applicable withholding limits before processing the deduction.

What should an employer do when it receives a garnishment order?

The employer should review the order, verify the employee and issuing authority, identify the type of garnishment, determine the applicable requirements, calculate the withholding amount, and establish the garnishment in payroll before the applicable deadline.

Can an employer ignore a garnishment order?

Employers should not simply ignore a valid garnishment or income-withholding order. Payroll should follow the order and applicable law and contact the issuing authority for clarification when the employer cannot properly implement the order.

What happens if an employee has multiple garnishments?

Payroll may need to determine which order has priority and how the applicable withholding limits interact. Employers should not process multiple orders independently without reviewing applicable priority and maximum-withholding rules.

What happens when an employee leaves the company?

Payroll should review all active garnishments and determine whether withholding, reporting, or termination-related action is required. Requirements can vary depending on the type of garnishment and applicable law.

Can an employer fire an employee because of a wage garnishment?

Federal law provides protection against discharge because of garnishment for a single debt in circumstances covered by the law. State law may provide additional protections. Employers should review applicable employment protections before taking action.

What should payroll do if a garnishment order appears incorrect?

Payroll should not simply disregard the order. The employer should follow the instructions provided and, when appropriate, contact the issuing court, agency, or authorized entity for clarification.

How often should employers review garnishment procedures?

Employers should periodically review active garnishments, payroll calculations, remittances, and applicable federal and state requirements. Garnishment rules and agency procedures can change, so procedures should be updated when requirements change.