What is Wage Garnishment?
A legally ordered deduction from an employee paycheck to repay a debt - which the employer must honor.
Wage Garnishment: definition
When an employee owes a debt that is not being paid, a court order or government agency can compel the employer to divert part of the paycheck. The employer becomes legally responsible for withholding the correct amount and remitting it. Federal law caps how much can be garnished (a percentage of disposable earnings), and priority rules apply when multiple garnishments exist - child support and tax levies generally rank first.
- Common types: child support, tax levies, student loans, court judgments
- Federal limits cap garnishment as a share of disposable earnings
- Priority order applies when an employee has multiple garnishments
- The employer must withhold and remit - non-compliance carries liability
How Fintra handles it
Fintra payroll applies garnishment orders as deductions, enforcing the federal (and applicable state) limits and the priority order when several apply, then remits the withheld amounts. Because it runs on the same platform as the books, garnishment liabilities are tracked to the ledger and the employee net pay reflects the deduction accurately and consistently.
- Garnishment deductions applied within legal withholding limits
- Priority ordering handled when multiple orders exist
- Withheld amounts tracked and remitted, and posted to the ledger
Worked example
Frequently asked questions
How much of a paycheck can be garnished?
Federal law generally limits ordinary garnishments to the lesser of 25% of disposable earnings or the amount above 30 times the federal minimum wage. Child support and tax levies can reach higher percentages. Some states set stricter limits, and the lower limit applies.
What types of debt can garnish wages?
Common garnishments include child and spousal support, unpaid federal and state taxes, defaulted student loans, and court judgments for consumer debts. Different types carry different limits and priorities, with support and tax obligations typically taking precedence.
Can an employer ignore a garnishment order?
No. A garnishment order is a legal obligation, and an employer that fails to withhold and remit can become liable for the amount, plus penalties. This is why payroll systems apply garnishments precisely and remit them on schedule.
What happens with multiple garnishments?
Priority rules determine which order is satisfied first, and the total is still subject to the overall legal cap. Child support and tax levies generally rank ahead of consumer judgments. Fintra applies the correct priority and limits when several orders apply to one employee.
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