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Wage garnishment: Compliance tips

by on
in Office Management,Payroll Management

Wage garnishment is a tricky business for employers. To keep garnishment practices on the straight and narrow, employers must know how to make deductions and how much to deduct; what is considered disposable income; and which garnishment orders take precedence.


1. Is an employer required to garnish child support from the pay of an employee on commission? What if the garnishment exceeds his/her pay? What are the employer's obligations?

An employer is required to make child support deductions from an employee who gets paid on commission. The Consumer Credit Protection Act (CCPA) defines "disposable earnings" as wages, salaries, commissions, or bonuses. The CCPA also sets out a formula for determining how much to withhold for child support. The maximum that can be withheld is limited to the amount that exceeds 50% of an employee's disposable earnings, if the obligated parent has a second family, or 60% if there is no second family. These limits are increased by 5% if child support payments are in arrears for 12 weeks or more.

So what you must do is either withhold the dollar amount that is specified in the support order, or apply the CCPA's formula to the employee's lowered disposable earnings. Here's an example.

A child support garnishment requires that the lesser of 60% or $400 be withheld from Mark's pay. For the first month, his disposable earnings are $2,072. His employer figures withholding: $2,072 x 60% of disposable earnings = $1,243.20. For the first month, the employer withholds $400. In the second month, disposable earnings are $660. Mark's employer withholds $396, which is the lesser of 60% of disposable wages ($660 x 60% = $396) or $400.

 2. Which takes precedence, child support or creditor garnishment?

Child support garnishment always takes precedence over creditor garnishment.

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