Employers receive garnishments for their employees for many reasons. Whether the order is for child support, a tax levy or creditor wage garnishments, it is extremely important that all such orders be handled promptly and accurately or employers can risk major consequences.
In most states, the employer may be liable for the full amount of a debtor’s outstanding debt, as well as interest and penalties. In extreme cases, employers deliberately violating a garnishment order may also be prosecuted criminally and face fines or imprisonment.
For terminated employees and those who have never been employed by the company, it is still necessary to complete any disclosure with this information, otherwise penalties and fines will still apply.
When receiving any garnishment order, the best practice is to send all paperwork received to your payroll specialist as soon as possible. They must review these documents promptly to ensure that all employer requirements are met in a timely fashion. Depending on the order, this may include not only putting the order into place for future payroll deductions, but also handling written responses to the garnishing authority and/or employee and employee pay records to show earnings available for garnishment.
Proper garnishment administration will not only help your business avoid penalties but will ensure that your employees stay in good standing with the court order, as well.
Dani Austin, Payroll Supervisor