Employers are required by state law to comply with various types of wage withholding orders and notices. Failure to comply with these may result in a variety of penalties, ranging from court-ordered appearances to the employer's arrest. These laws generally require that the claims be handled accurately and timely to avoid liability and penalties. Employers should understand that when they withhold and remit earnings in excess of legal limits or on invalid claims, they may be held liable to the employee for the lost wage payment.
As a result, employers should establish procedures to handle these claims. Such procedures should include:
1. Determining as soon as possible the correct amount to be withheld;
2. Determining if the person named in the order is an employee or a former employee or was never employed by the employer;
3. Confirming that the court order or notice is valid under state law and all required documents were delivered;
4. Verifying the amount of the claim to be paid under the notice;
5. Determining whether the garnished amount is within the legal limits of the state;
6. Ranking multiple garnishments for an employee according to priority;
7. Completing all answers or interrogatories including answers for persons who are terminated or were never employed by the employer; and
8. Reconciling all documents received against those processed or responded to.
Notice to employees. Some states require the employer to give the employee documents sent with the garnishment. A copy of all out-of-state income withholding orders for support must be given to the employee. (Some states identify support orders that must be provided to the employee regardless if the orders were issued within or outside the state.) As a policy, many employers notify their employees that their wages will be garnished and the amount or percentage that will be withheld.
A notice of garnishment or assignment normally includes the following information:
1. When wage withholding must begin;
2. If certain documents must be delivered to the employee;
3. The amount or percentage to be withheld;
4. When the withheld amount must be remitted and to whom;
5. When to answer and file interrogatories;
6. How and to whom payment is to be made;
7. The total amount to be garnished under the order;
8. When the order may be stopped; and
9. Applicable federal or state laws that must be followed.
Source: Aspen Payroll Answer Book, 2012 edition.