Wage garnishment is a tricky area of law, and HR can expose itself to financial liability for mishandling it. For example, employers can be liable for employees’ debt if they fail to respond correctly or follow specific requirements (like those related to public debts). Organizations should keep wage garnishment information confidential to prevent these scenarios from happening. Here are some steps to do so.
Ensure Wage Garnishment Information Is Confidential
A creditor can garnish an employee’s wages if they win a judgment against the debtor in court. This judgment can be for several reasons, including unpaid child support or alimony after divorce, back taxes to the IRS, student loans and credit card debt. A garnishment can be ordered by state or federal law, and if an employer fails to follow the rules, they can face fines or even lose their business license. An employee has a window of time to challenge the garnishment order. However, suppose they cannot reach an agreement with their creditor or believe they will be subject to financial hardship because of the garnishment. Individuals might need an experienced bankruptcy and debt management lawyer in that situation.
Once the employer receives a garnishment order, they must review the information and ensure the correct amount is taken out of each pay period and that the garnishment ends on the right date. Using payroll processing and talent management software can help track these details and keep the employee file secure and confidential. Employees should never share their wage garnishment status with coworkers or others outside the organization. If a coworker finds out that an employee is having their wages garnished, it could cause them to feel embarrassed or ashamed, which can be counterproductive.
Maintain Confidentiality of Garnishment Information
The employer of a worker with their garnishments payroll must withhold a portion of each paycheck and transfer it directly to the creditor. This process will continue until the debt or legal obligation is fully paid. Certain forms of income, including Social Security or unemployment assistance, are protected from garnishment. Additionally, there are limits on the amount of earnings that can be garnished under federal and certain state laws. Depending on the type of debt, the creditor, the state or other federal law, and the method of determination of financial hardship (if applicable), an employee may have a window of opportunity to challenge the garnishment order. Employees should carefully review the instructions on challenging the garnishment order and provide a detailed explanation of their reasons for objecting.
HR professionals should limit access to wage garnishment information to those who need to know, such as those in accounting or the employee’s supervisor. It should be done to avoid exposing confidential employee information. Employees who cannot stop or challenge the garnishment should seek legal help. The amount deducted from an employee’s salary might be decreased or removed if they can devise a plan, and creditors and debt collection companies are frequently prepared to negotiate repayment agreements.
Train Employees on Garnishment Procedures
Until the debt is paid off or other legal responsibilities are satisfied, your organization must withhold a specific amount from an employee’s paycheck and deliver it directly to the creditor or other party they owe money. A court order for wage garnishment requires it. This type of debt collection is commonly used for child support, student loans or consumer debt. However, the percentage taken from employees’ wages depends on federal or state law and other factors, such as whether they have other financial obligations and children. When employees receive notice of a garnishment, they may question the validity of the request or argue that it will impact their financial stability. From an HR perspective, it’s important to help them understand their rights and the underlying laws. Your team should also be prepared to work with these individuals on how best to address their garnishment issues. Employers must comply with garnishment laws to protect themselves and their employees. If they mishandle a garnishment, they could be held responsible for the entire debt or face a lawsuit from the creditor or the employee. To minimize risk, HR should educate their team on the process, how to calculate deductions accurately and how to follow garnishment orders exactly. Additionally, they should use a payroll solution that can automate and streamline this process.
Keep Garnishment Information Secure
The legal procedure known as wage garnishment entails a court order telling an employer to deduct money from an employee’s salary and send it to a creditor or the courts. It is a common way for debtors to collect unpaid debts, including due child support, student loans, back taxes and alimony. Creditors typically pursue wage garnishment only after other collection methods have failed. Employees need to understand that their wages are protected by law, and they can work with the creditor to set up a payment plan or even wipe out the debt altogether with a lump sum settlement.
Garnishments are unpleasant, but HR departments must adhere to the rules and legislation controlling this procedure. It includes ensuring that employees’ files containing garnishment information are kept confidential and that the garnishment does not impact promotion or disciplinary decisions. The best practice is limiting access to these documents to only those who handle payroll processing and human resources. It is also important to ensure that these individuals do not share this information with coworkers or people outside the organization. Wage garnishment is a complicated, sometimes uncomfortable topic that will continue to be a part of HR’s work for the foreseeable future. However, if an HR department takes the time to implement these tips, they can minimize headaches for themselves and their employees while maintaining compliance with federal and state regulations.
