Wage Garnishment FAQ for Employers

A wage garnishment is a legal procedure through which a portion of a person's earnings is required to be withheld by an employer for the payment of a debt. Most garnishments are established through a court order, though some, such as those for federal student loans or unpaid taxes, can be initiated directly by a government agency, like an IRS levy, without going through the courts first.

Most of the time, only an employee's disposable earnings are subject to garnishment. Disposable earnings are what remains after legally required deductions, such as federal, state, and local taxes, have been subtracted from gross wages. When your company receives a garnishment order, they are legally required to:

• Withhold the specified percentage or fixed dollar amount from the employee's disposable earnings
• Send those withheld funds directly to the designated creditor or government agency
• Continue withholding until the debt is paid in full or your company receives official notice to stop

It's worth noting that each garnishment order can carry its own specific rules for implementation, calculation, and reporting, which is why this process can get complex, especially when an employee has multiple garnishments in effect at once. Garnishments are also subject to protections under Title III of the Consumer Credit Protection Act (CCPA), which limits how much of an employee's earnings can be garnished and protects employees from termination due to a single wage garnishment.

Under Title III of the CCPA (15 U.S.C. § 1674), an employer is strictly prohibited from discharging an employee because their earnings have been subjected to garnishment for any one indebtedness. While federal law does not expressly protect workers garnished for two or more separate judgments, many states (such as California, Connecticut, and New York) impose broader employee protections prohibiting termination regardless of order count.

Answer deadlines vary by jurisdiction, ranging from 10 calendar days (e.g., Minnesota, Georgia) to 20 or 30 days in other courts. Crucially, failing to file an Employer’s Answer within the statutory window exposes the company to a motion for default judgment against the garnishee, making your company directly liable for the worker's entire unpaid debt plus court costs. Global Pay guarantees submission of all formal answers within 48 hours of service.

When an order is received for someone who is no longer employed, was never employed, or has transferred divisions, Global Pay’s e-IWO system automatically transmits an electronic Acknowledgement/Response (A/R) back to the state agency with the appropriate non-match reason code and last known contact details. This satisfies the state’s legal notification mandate instantly without manual letters.

Some state statutes authorize employers to deduct an administrative fee ($1 to $15 per check depending on state law) to offset clerical overhead. Global Pay automates this calculation in your payroll system, deducting the authorized fee within legal caps and retaining or crediting it to your corporate account. For high-volume employers, this fee recovery substantially or entirely offsets our service fees.