The reality of a tough economy is an increase in financially troubled employees, which can lead to wage garnishments or child support orders. Employers served with these orders must be prompt in their response. Otherwise, they risk liability for the debt on their employee's behalf.
Support orders or garnishments typically fall under three common categories. The most common type is a court order stating the amount owed by the employee to a third party and instructing the employer to withhold certain amounts. Such orders, if proper, are to be fulfilled in a timely manner as stated in the order (e.g., upon the next pay period beginning 14 days after the employer is served with the order).
Less common are states that require an employer to answer “garnishment interrogatories,” which ask basic questions about an individual's employment status. These questions require a timely response, possibly signed and notarized, sometimes in as little as 20 or fewer calendar days. Once a court receives the response, it will issue a subsequent order to the employer, only then triggering the actual garnishment.
Third, some states, such as Illinois, allow a private party to pursue a wage garnishment without any court intervention using a “wage assignment” form. Because the entire process occurs outside the judicial system, there is significant room for error and abuse. Employers should proceed with extreme caution and are well advised to seek legal counsel.
Regardless of the type, most federal and state laws contain provisions that place employers on the hook for a garnishment if they are not timely in their response, or fail to follow the order. Even if a garnishment concerns a former employee, a response is still required.
At times, an employer may find itself in receipt of more than one garnishment order. Normally, such orders are prioritized as follows: child or family support orders, IRS tax levies, federal levies such as a Department of Education garnishment, and other garnishments. It is important for employers to understand the type of garnishment so it can properly prioritize withholdings. A failure to withhold an IRS tax levy with priority because an employer is instead fulfilling a standard garnishment may similarly subject the employer to the employee's liability.
Because family support, child support, and many garnishment matters are handled at the state level, an employer must typically abide by the state laws of the employee's place of employment. Given the broad mix of applicable state laws, employers present in multiple states should seek legal counsel if they are uncomfortable maintaining a firm grasp on the varying laws. Finally, employers must bear in mind that, in most scenarios, the law prohibits employer retaliation, such as terminating an employee, because of a support order or garnishment.
Federal agencies, as well as many states, offer useful guides to explain the garnishment process to employers. The IRS offers a guide to the collecting process (http://tinyurl.com/5uhbj9t). The U.S. Department of Labor offers wage garnishment guidance (http://tinyurl.com/2g4a2wg) as well. The U.S. Department of Education has an Employer's Garnishment Handbook (http://tinyurl.com/5vttjta).
As for state garnishments and child or family support orders, the law varies by state. If an employer is in receipt of a garnishment or support order that causes confusion or concern, it should seek legal advice. Whether an employer handles such garnishments internally or utilizes outside legal counsel, it is critical to be responsive in a timely manner. Otherwise, the employer may be left paying the bill.