What is Wage Garnishment?

Simply put, a wage garnishment is a legal agreement that allows a debt to be paid back through an employee’s wages. While garnishments are taken from employees, they impact employers as well.

When a garnishment notice arrives at your office, it should be expected that the employee has already received the same paperwork. It’s the right of the employee to be legally notified of the garnishment by the garnishing agency—not the employer. Your obligation is only the collection and timely payment of the garnishment from the employee’s wages.

I would like to emphasize that last point: Employers who fail to withhold garnished wages can be subject to fines, penalties, and attorney’s fees. In some jurisdictions, an employer can actually be held liable for the full amount their employee owes if the employer fails to withhold. Employers should also be aware that employees subject to garnished wages are protected by Title III of the Consumer Credit Protection Act. This law states that you cannot terminate an employee for a garnishment order arriving for them.

Want even more payroll content? Read our guide covering federal and state taxes, overtime rules, and more.

In general, garnishment notices will be very explicit about the responsibilities of the employer. If you receive a withholding order, read through the notice carefully. It will always include instructions on where and how the payment should be made. The notice will also provide a contact for questions. Most importantly, the notice will include the amount owed per pay period, and how to compute the amount owed on the employee’s disposable income.

Disposable income is calculated by subtracting all required deductions from an employee’s earnings. Examples of required deductions include federal, state, and local taxes. Voluntary deductions such as retirement plans, health insurance, union dues, and transit amounts are not deducted when determining disposable income.

Garnishment Types

Why would an employee’s wages be subject to garnishment? The most common garnishment types are child support, student loans, individual debt, and back taxes. Depending on the type of withholding order, there are state and federal regulations on how much can be handled. Let’s break these down individually and share the limits by type:

Child Support: Child support notices often provide a flat dollar amount to be collected based on the employee’s pay frequency. However, these amounts can never exceed 60 percent of disposable income. If the employee is supporting another child (not subject to the order), the amount is lowered to 50 percent of disposable income. If the employee owes back payments, each of those amounts can be increased by 5 percent.

Student Loans: A student loan garnishment is probably the easiest withholding order you can receive. If an employee defaults on their student loans, they will be notified that their wages are subject to garnishment. The U.S. Department of Education or designated collector can garnish up to a flat 15 percent of disposable income.

Individual Debt: There are a few types of individual debt that roll up into this category. Collections can occur due to credit card debt, medical bills, personal loans, or any other type of consumer debt. These collectors are limited to the lesser of 25 percent of disposable income or the amount by which your income exceeds 30 times federal minimum wage ($7.25 per hour).

Ex. An employee’s disposable income is $400.00. 25 percent of that number is $100.00. $400.00 exceeds 30 times $7.25 (30 x $7.25 = $217.50) by $182.50. The lesser amount, or $100.00, is the limit collectors must abide by.

Back Taxes: Here’s where things can get complicated. Federal garnishments are commonly based on standard deductions and dependents. While most states follow federal guidelines, some may have their own rules in place. In these cases, read the garnishment order closely for detailed instructions and contact information.


After garnishment deductions are removed from the employee’s disposable income, those amounts need to be remitted to the garnishing agency, debt collector, or law firm that imposed the wage execution. These payments are sent electronically or by check.

Garnishment payments should continue to be made for the duration of the employee’s service. When a garnishment has been satisfied, the agency will reach back out and send a notice to cease collection. Even if the initial order comes with a total amount to be paid back, it’s best practice to continue paying the garnishment until notified otherwise. Why? Interest can accrue on the amount due as it is being paid back.

Every HR and payroll professional has had to deal with wage garnishments at one point or another. Do you outsource payroll processing? Any provider worth its salt can help you navigate the process. Garnishments may come in different shapes and sizes, but ultimately, they always need to be handled with care.

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