If one of your creditor’s has won a judgment against you (meaning the creditor sued you for nonpayment of a debt, and won), one of the ways they can seek repayment from you is by a wage garnishment. A wage garnishment essentially means your employer receives an order requiring the employer to hold back a portion of your wages during each pay period to pay to the creditor until your judgment is satisfied, i.e., paid
It is important to note that the Internal Revenue Service (IRS) receives special treatment. The IRS does not have to have a court judgment to garnish your wages, you simply need to owe back taxes.
If you find yourself holding a notice of wage garnishment, either as the employer or employee, there are few things to know.
First, there are limits to how much can be garnished from a person’s income. Often, the amount varies by state. The typical garnishment limit is usually around 15% of an individual’s income. As an employee, you may be able to contest a garnishment amount by proving living necessity for a lower garnishment amount in court. As an employer, it’s vital that you know what the limits are for your state. Should you accidentally garnish a higher amount than is legally allowed, you may be vulnerable to unwanted employee issues.
Second, most states have a limit as to how long a garnishment can last. Because a creditor is taking a portion of a person’s living wages for each pay period, states have limited how long a creditor may use garnishment in the judgment collection process. Both employees and employers should be knowledgeable of the maximum amount of time a garnishment can be enforced.
Third, mistakes happen. Our attorneys have had calls regarding garnishments ranging from employees being garnished for debts that had already been fully paid years previously to garnishments for the wrong individual altogether. When you receive paperwork for a garnishment, the employer and employee should sit down together and review the paperwork in detail. Make sure it is for the correct person, correct amount and that everyone understands and is aware of what the process entails.
As an employer, you must notify an employee of any wage garnishment you receive on their behalf. Not only are you legally required to provide such notice but you will want to make sure that the employee is aware that their income will be limited for a specific length of time. Providing notice also allows for the employee to seek court or legal assistance should the garnishment be in error. The notice will apprise the employee of their rights and any steps they may take to contest the garnishment.
If your business needs assistance navigating the sometimes murky wage garnishment statutes, Bellatrix PC can help. Contact our firm online, or call us at (800) 449-8992 to schedule a confidential consultation. Ask about our Employer Protection Package.