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Payroll Wage Garnishments 101
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HR + Payroll Software

Payroll Wage Garnishments 101

One-Minute Takeaway

  • Employers can withhold payroll garnishments from an employee’s paycheck until a debt is paid.
  • Wage garnishment rules vary based on the type of debt owed and federal law sets maximum limits.
  • Employers have a legal obligation to comply with wage garnishment mandates and can use Paycor’s platform to ensure compliance.

Wage garnishments can be a complex and challenging process for employers to navigate. But, if you’re responsible for payroll, it’s a process you can’t just ignore, especially since employers have a legal obligation to comply with wage garnishment mandates. Fortunately, you don’t have to figure it all out alone. Paycor is here to help. Start here for an overview of wage garnishments, an explanation of how the process works for employers and even a sample letter to notify employees.

What Are Payroll Garnishments?

A payroll garnishment occurs when a court issues an order requiring an employer to withhold a certain amount from an employee’s paycheck and send it directly to the organization or person owed money, until the debt is fully paid. While different garnishment rules apply to varying types of debt, there are maximum limits to how much can be garnished from an employee’s paycheck.

How Payroll Wage Garnishments Are Issued

Most creditors are required to provide a court order to garnish wages and federal law mandates how much can be taken from an employee’s paycheck.

  • The garnishment is limited to 25 percent of an employee’s disposable earnings (remaining earnings after required deductions) OR
  • The quantity by which an individual’s weekly disposable earnings surpasses 30 times the minimum wage, whichever is lower.

Types of Payroll Wage Garnishments

Creditor Garnishments

If one of your employees owes money to a private creditor and is unable to pay, they can be sued. If the creditor wins the lawsuit, or receives a default judgment, they will be able to serve you with a court order to garnish your employee’s wages.

Child Support & Alimony

Up to 50% of an employee’s disposable earnings can be garnished to compensate for child support if that employee is currently supporting a spouse or child not the subject of the order (such as being remarried). In the event that an employee is not supporting another spouse or child, up to 60% of his/her earnings can be seized. If an employee is more than 12 weeks in arrears on paying child support, these rates go up to 55/65% percent respectively.

Note for employers: An employee cannot be terminated, disciplined or retaliated against because their wages are garnished for child support payments.

Student Loans

The U.S. Department of Education and other government agencies attempting to recuperate unpaid debt like a student loan have the ability to garnish up to 15% of an employee’s compensation for failure to pay a student loan. Unlike other garnishments, a lawsuit or court order is not required for this action. An employer must be notified a minimum of 30 days before the garnishment is set to commence of the following:

  • Amount owed
  • Instructions to obtain a copy of the loan records
  • How to enter a voluntary repayment schedule
  • Instructions to request a hearing on the proposed garnishment

Tax Debts

Tax authorities have their own parameters for wage garnishment for unpaid taxes. The IRS determines the amount owed based on how many dependents and employee claims and their standard deduction amount. State taxing authorities may have their own methods for determination. The IRS will deliver a notice before they begin garnishing, but keep in mind they aren’t required to get a judgment first.

How Does the Wage Garnishment Process Work for Employers?

Employers can face a difficult and sometimes uncomfortable task of managing wage garnishment mandates while balancing sensitivity around challenging circumstances affecting employees. But, by law, employers are required to comply.

If you receive a wage garnishment order, here’s what you as the employer should do:

  1. Notify the employee of the garnishment and provide information on how to protest it.
  2. Calculate the amount to be withheld from the employee’s paycheck based on the garnishment order and federal or state law.
  3. Deduct the appropriate amount from the employee’s paycheck and remit it to the creditor or legal authority.
  4. Keep accurate records of the garnishment, including the start date, amount withheld, and end date.
  5. Inform the creditor or legal authority if the employee’s employment status changes, such as termination or resignation.
  6. Follow all applicable federal and state laws regarding wage garnishments.
  7. Use a payroll platform, like Paycor, to ensure compliance and streamline the garnishment process.

What Are the Key Watchouts for Wage Garnishments Employers Need to Know?

It’s important for employers to note that Title III the CCPA (Consumer Credit Protection Act) protects employees from being fired by their employers if their wages have been garnished due to a debt. It also sets limits on the maximum amount of an employee’s earnings that can be garnished in a single week for specific types of debts.

The amount of an employee’s pay that can be garnished is based on their disposable earnings, or the amount of money they make after mandatory deductions are taken out. Deductions can include things like taxes, Social Security, and retirement contributions required by law.

According to federal law, wage garnishments can only take 25% of an employee’s earnings after deductions or everything beyond 30 times the federal minimum wage. However, in child support cases, up to 50% of an employee’s disposable income can be garnished.

Need a sample letter for notifying employees? We’ve got you covered:

Dear [Employee Name],

We hope this letter finds you well. Unfortunately, we have received a wage garnishment order from [creditor name], which requires us to withhold a portion of your earnings from each paycheck until the debt is paid in full.

Under federal and state law, we are obligated to comply with the wage garnishment order. Starting with your next paycheck, we will begin withholding [insert amount or percentage] from your gross wages and send it directly to [creditor name]. This amount may be adjusted based on any applicable exemptions or maximum garnishment limits.

We understand that this may be a difficult situation for you, but please know that we are required to comply with the wage garnishment order. We will do everything we can to protect your privacy and confidentiality during this process.

If you have any questions or concerns, please do not hesitate to reach out to us. We are here to support you and ensure that you receive the necessary information and resources to manage this situation.


[Your Name]
[Your Title]

How Paycor Can Help

At Paycor, our unique combination of technology and expertise helps our customers streamline every aspect of people management so they can focus on what they know best—their business and their mission.

Paycor can help you navigate these complex circumstances and ensure compliance with our online payroll platform and wage garnishment processing service that creates, calculates, deducts and disburses garnishments on your behalf. For more information about our payroll product, contact our team today.

Paycor is not a legal, tax, benefit, accounting or investment advisor. All communication from Paycor should be confirmed by your company’s legal, tax, benefit, accounting or investment advisor before making any decisions.

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