Wage Garnishment: An Overview of the Process and Penalties for Non-Compliance
Wage garnishment is a legal process where employers are required to withhold a portion of an employee's wages to settle an outstanding debt. Failure to comply with federal and state laws regarding wage garnishment can result in severe penalties. In this article, we will guide you through the wage garnishment process, types of garnishment, common situations that warrant wage garnishment, how employers are notified, and the maximum amount that can be garnished.
Types of Garnishment
There are two types of garnishment: wage garnishment and non-wage garnishment. In wage garnishment, employers are required to withhold an employee's wages to pay off their debt. Non-wage garnishment, or bank levy, involves the court ordering the individual's bank to withhold money from their bank account as payment for outstanding debt.
Common Situations for Garnishing Wages
The most common situations that warrant wage garnishment include alimony or spousal support, child support, outstanding tax debt, student loan default, bankruptcy, and other consumer debts.
How Wage Garnishment Works
When garnishment is ordered, the employer and the employee will typically receive a notice from either the court or a government/state agency. The notice will contain instructions on how to start garnishing wages and resources to contact if help is needed. Employers should consult with an attorney to ensure compliance with the order.
What is the Maximum Amount That Can Be Garnished?
The amount to be garnished will depend on the employee's disposable income, which is the income remaining after mandatory deductions. Title III of the Consumer Credit Protection Act (CCPA) sets limits on the amount of wages that can be garnished, including alimony and child support, federal student loans, federal or state taxes, and ordinary garnishments not covered above. The limits vary depending on the employee's weekly disposable income.
Penalties for Non-Compliance
Employers who fail to comply with wage garnishment orders risk severe penalties, including fines, contempt of court, and legal action by the employee. The Internal Revenue Service (IRS) can impose a 100% penalty on employers who fail to comply with wage garnishment orders.
Conclusion
Wage garnishment can be a challenging process for employers, requiring strict compliance with federal and state laws. Failure to comply can result in severe penalties. Employers should familiarize themselves with the wage garnishment process and consult with an attorney to ensure compliance.
