A garnishment notice is sent to an employer when a court directs that employer to withhold earnings for an employee’s debt. Different types of garnishments include:

• Child Support
• Alimony
• Credit/Debt
• Student Loans
• Back taxes

Only a certain percentage of wages can be deducted from paychecks for garnishments. For regular debt garnishments, employers can only deduct up to 25% of an employee’s disposable pay. Disposable pay is gross wages minus any deductions that are required by law, such as, federal, state and local taxes. This limit is in place no matter how many different credit garnishments an employee has. Only 25% total of disposable pay can be deducted.

For child and spousal support garnishments, there is a greater amount of an employee’s wage that can be deducted. These deduction amounts are allowed up to 50% of an employee’s disposable pay if the employee is currently supporting a current spouse or another child that is not on the support order. If neither of those apply, then up to 60% of disposable pay is allowed for deduction from the employee’s paycheck.

Title III of the Consumer Credit Protection Act (CCPA) protects employees from being discharged from their jobs because their wages were garnished with one debt. However, the Act does not prevent an employer from discharging an employee after two or more debts are garnished separately.

If you’re looking for a Payroll Partner, and not just a payroll system, to help you navigate complicated payroll regulations, contact us at The Employer Group: [email protected].