Small business owners may encounter wage garnishment orders if employees fail to pay their debts. With wage garnishment, a court can seek employers’ help in recovering these payments. Here the employer is called the garnishee.
Payroll compliance is a must to avoid penalties. If wage garnishments are delayed or processed inaccurately, the employer can be held responsible not only for the garnishment amount, but also other costs. In certain cases, noncompliance can even lead to imprisonment.
Wage garnishments can be initiated by local, state, or federal government agencies. When an individual fails to repay a debt on time, the creditor can approach the court. If the court rules in the favor of plaintiff, a wage garnishment order may be issued by the judge to ensure debt repayment. Wage garnishment is an effective method of collecting unpaid debts such as child support or student loans. Garnishments may also be initiated for collecting unpaid parking tickets or taxes.
Wage garnishment is regulated by several laws protecting employees from job loss and also placing a ceiling on the amount of wages that can be garnished. As per the Consumer Credit Protection Act (CCPA) Title III, employers cannot discharge employee earnings subject to garnishment, even if multiple proceedings or levies are brought upon it.
The garnishment process begins when the court sends a garnishment notice to an employer asking them to hold back the assets or wages of an employee. The request is usually sent as a “writ.” The employer needs to begin wage garnishment from the employee’s payroll immediately. The garnishment request offers all the information regarding steps that need to be taken by an employer.