A Simple Guide to Handling Payroll Garnishments

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Payroll Garnishments

Payroll garnishments can be a difficult issue for employers to deal with. There are a few different approaches you can take to handle the situation. These include: letting employees know about the garnishment and answering any questions they might have about it. It is also important to inform them about the process and their rights. 

Employers

Payroll garnishments can be a tricky situation for employers. As a result, you must follow the proper procedures when handling garnishments. First, you must ensure that the employee knows the garnishment process. You can obtain a garnishment notice, which contains all the details. The notice may also include a garnishment calculator, which helps you determine how much to withhold from an employee’s pay. The amount to withhold varies but generally falls between 15% to 50% of the employee’s net pay.

Next, you should create a plan for handling payroll garnishments. You can hire a third-party processing service for payroll garnishments or handle the garnishments yourself. Whatever you decide, you must ensure that you comply with all laws and regulations. If you are still determining the steps to take, it is a good idea to seek the advice of a professional in this area. If you can’t afford a professional, you can use a garnishment payment service to remit the funds to the proper agency. By doing so, you can avoid any liability that may arise.

A garnishment notice can be a hassle. While it may be tempting to talk to an employee and resolve the issue, it is best to follow the garnishment order. Not following it could land you in trouble. Third-party payroll processing services often include federal and state garnishment calculations. They may also include payment processing features. However, it would help if you created effective procedures and policies to avoid getting into trouble with garnishment orders.

Disposable Income

A term you need to know when handling payroll garnishments is “disposable income.” This is the amount of money an employee has left after all required deductions. These include federal, state, and local taxes and mandatory payments to public employee retirement systems. Disposable income includes an employee’s monies to spend, save, or invest. Disposable income does not include income from employer-sponsored plans such as health insurance, union dues, or charitable contributions.

In most cases, the amount of pay subject to garnishment is based on the employee’s “disposable income.” Disposable income refers to an employee’s total compensation minus any mandatory deductions. This includes salaries, bonuses, sales commissions, retirement plans, and other compensation. Tips are not usually included in this calculation, but other types of compensation, like service charges, can be included.

Disposable income is determined by using a table. The first column represents the employee’s disposable income, while the second is for the employer’s use. If the employee has more than one order from the same organization, use the table to determine how much disposable income the employee has left.

The court may order that a portion of the employee’s disposable income be garnished to pay for a debt. However, the amount an employer is allowed to garnish is limited. The Consumer Credit Protection Act regulates the amount that can be garnished. This Act is intended to protect employees from financial hardship.

Opposition to a Garnishment

If you received a notice of payroll garnishment and you feel that your earnings are exempt from garnishment, you should object in writing to the creditor. You should explain the reasons for your objection and include calculations to support your claim. Most states provide forms for opposing garnishment. In some cases, you may have additional reasons to oppose a garnishment, such as having already paid a judgment creditor or receiving a bankruptcy discharge.

A garnishment will not be effective if it is issued before an employee’s earnings are received in the current calendar year. To determine how much of an employee’s earnings are subject to garnishment, divide the previous year’s gross earnings by the number of weeks the employee worked that year.

To object to a payroll garnishment, the creditor must first provide you with a written notice, known as a “Notice of Garnishment of Personal Earnings.” Depending on the creditor, the court will give you a deadline to object, typically 30 days or five business days.

Sometimes, you can modify the garnishment downward or even terminate it. However, your objections will not hold if the court rules that the garnishment should proceed.