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Successful Steps to Calculating Wage Garnishments


Wage garnishments are an important topic for employers to understand because they may at some point affect the wage calculations for an employee. Employers are prohibited from discharging an employee simply because the employee's wages have been subject to garnishment.

What is a Wage Garnishment?

A wage garnishment occurs when money is deducted from an employee's paycheck for the payment of a debt. Most wage garnishments will require a court order, although the U.S. Department of Education and the Internal Revenue Service may garnish wages without one.

Verify the Limits

Wage garnishments may happen in a variety of forms, but all wage garnishments are limited to certain amounts (for example, no matter how high the debt, employees will always be allowed to keep a certain percentage or amount of their paycheck). This information is included in the Consumer Credit Protection Act, which limits withholding to no more than 25 percent of employee disposable earnings, or the amount said disposable income goes beyond 30 times the minimum wage (whichever is less). Make sure to complete both calculations to verify accuracy.

Match the Limit to the State

Although there are federal guidelines for wage garnishment, a call to your state department of labor will ensure you're also following any state-specific laws or rules. Due to the variation in state laws around the country, this is a call worth making. Document who you spoke to, the date, and the information you were told.

Complete IRS paperwork

IRS wage garnishment and levy paperwork will walk you through the steps of completing the wage garnishment. Paperwork should also include any relevant contact information, which you should not hesitate to use if you have any questions. This is certainly one scenario where it's in your best interest to contact many people rather than attempt to guess and create possible errors.

Wage garnishments result in extra work for the employer, and it's important to have accurate documentation throughout the entire process. Verify accuracy, ask questions, and double check your work before submitting final paperwork.

This website contains articles posted for informational and educational value. Paychex is not responsible for information contained within any of these materials. Any opinions expressed within materials are not necessarily the opinion of, or supported by, Paychex. The information in these materials should not be considered legal or accounting advice, and it should not substitute for legal, accounting, and other professional advice where the facts and circumstances warrant.
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