Wage garnishment – even the words sound scary. Do you understand how this process works? As an employer, you would do well to not only understand when you are legally required to withhold wages, but to also understand how it affects an employee who is under the gun. Rather than assuming a “they got what’s coming to them” stance, looking at wage garnishment from both sides of the fence allows you to comply with the law and still maintain a productive, healthy environment with your employees.
Wage garnishment can happen as a result of unpaid child support, owed taxes, bankruptcy or some other court-appointed collection of a debt. In the case of ordinary debt, the law protects the garnishee by making sure they can keep a portion of their income, regardless of the amount or type of debt. Generally speaking, the garnishment is restricted to 25% of the gross earnings, or the amount by which an employee’s wages are 30 times greater than minimum wage, whichever is less. In the case of owed child support, the amount that can be garnished is much higher – up to 60% if no other child support is being paid. When it comes to garnishment for the purposes of tax debt or bankruptcy, the higher limits also apply.
As an employer, know that it is illegal to fire someone for an initial wage garnishment. However, if a second or subsequent garnishment takes place, for a different debt, that protection expires. As an employer, you have an obligation to make sure the payment is made on time and to the appropriate place.
The working relationship of an employer with their employees is critical to morale and productivity. Regardless of your personal feelings about wage garnishment, the best interest of your company is to handle things with tact and consideration. Your business will flourish as you maintain your professional relationship with your employees, regardless of their personal financial difficulties.