Payroll Garnishment: What Employers Must Do When an Order Arrives

What a garnishment order is and where it comes from

Wage garnishment is a collection mechanism: instead of chasing the debtor, the creditor gets a court or agency order directing the debtor's employer to divert part of each paycheck. Common sources include court judgments for consumer debts, child support orders, federal or state tax levies, and federal student loan collections — and the rules differ by type, with child support and tax levies operating under their own frameworks.

The order arrives as legal paperwork — often called a writ of garnishment, income withholding order, or levy — naming your employee, the amount owed, and instructions for calculating and remitting the withholding. It will also name a deadline for the employer to respond, frequently by completing an answer or acknowledgment form.

The critical mindset shift: once served, this is your legal obligation, not the employee's. An employer who ignores a garnishment order can be held liable for the amounts that should have been withheld — in some states for the entire underlying debt. Treat the paperwork with the same urgency as a tax notice.

Your obligations, step by step

First, respond by the stated deadline. Most orders require the employer to file an answer confirming the person works for you and stating their earnings. Do this even if the named person no longer works for you — say so in the response. Silence is the one universally wrong move.

Second, notify the employee promptly and privately. They may not know the order was issued, and they may have grounds to contest it — exemption claims, identity errors, already-satisfied debts — but those challenges are theirs to raise with the court, not yours to adjudicate. Your job is to follow the order as written until the court or agency tells you otherwise. Keep the conversation discreet; a garnishment is sensitive financial information, not breakroom news.

Third, calculate the withholding under the order's instructions and the legal caps (next section), withhold it each pay period, and remit it to the address or agency specified — on the schedule specified. Keep records of every calculation and payment. The garnishment continues until the order says it ends: typically when the debt is satisfied or the court releases it, not when it feels like it's been long enough.

How much can be garnished: the federal CCPA caps

The federal Consumer Credit Protection Act limits ordinary garnishments to the lesser of two numbers: 25% of the employee's disposable earnings, or the amount by which weekly disposable earnings exceed 30 times the federal minimum wage. Disposable earnings means pay left after legally required deductions — taxes, Social Security, Medicare — not after voluntary ones like health premiums or retirement contributions.

The two-part formula protects low earners: an employee whose disposable earnings are at or below the 30×-minimum-wage floor has nothing subject to ordinary garnishment at all, no matter what the order says. For everyone above the floor, you withhold the smaller of the two calculations.

Different debt types carry different limits. Child support withholding can reach substantially higher percentages of disposable earnings under its own federal rules, and tax levies follow IRS tables rather than the CCPA formula. And states can be more protective than federal law — several cap garnishment below 25% or shield more income — so when state and federal limits differ, the employee gets the more protective one. Check your state's rules before processing the first withholding.

The protection employers forget: you can't fire over one garnishment

Federal law (the CCPA again) prohibits firing an employee because their earnings are garnished for any one debt — no matter how many orders or proceedings that single debt generates. The annoyance of administering a garnishment is not legal grounds for termination, and dismissing someone over it exposes the business to penalties.

The federal protection is limited to a single debt; it does not extend to an employee garnished for a second, separate debt. But several states protect beyond that, barring termination for multiple garnishments — so don't treat the federal floor as a green light. Given the stakes, terminating anyone in connection with garnishments is a talk-to-a-lawyer-first decision, full stop.

Practically, the safest culture is one where garnishment is treated as routine payroll plumbing. It says nothing you need to act on about the employee's character or future, and handling it quietly and competently is both the legal path and the decent one.

Multiple garnishments and getting the details right

When a second order arrives for the same employee, priority rules decide who gets paid first. Child support generally takes priority over ordinary creditor garnishments, and tax levies have their own priority rules; among ordinary creditor garnishments, priority often runs by order of service, with the second creditor waiting until the first is satisfied. The combined withholding still can't exceed the applicable caps. Priority stacking is genuinely intricate — when orders collide, call the issuing courts or a payroll professional rather than guessing.

Every garnishment calculation starts from the same input: the employee's actual earnings for the period. Hourly employees with variable schedules have variable disposable earnings, which means the withholding can change every pay period — and the 30×-minimum-wage floor can switch a low-hours week to zero withholding. Accurate hours are the foundation; a time clock that produces clean, correct totals (Kloqk's is free) keeps the rest of the math standing on solid ground.

Finally, document everything: the order, your answer, each period's calculation, each remittance, and the release when it comes. If the creditor, the court, or the employee ever disputes the handling, the employer with a complete file wins the conversation quickly.

Frequently asked questions

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