Workforce Payroll does not directly handle payments and or correspondence with agencies, the purpose for this guide is to assist our customers to understand their role and actions needed in handling garnishment orders.
Introduction
Employee wage garnishments are a legal procedure by which a portion of an employee's earnings is withheld by the employer for the payment of a debt, such as child support, tax debts, or court judgments. This guide will help you, as an employer, understand the process of managing employee garnishments within Workforce Payroll, which does provide for the setup of the garnishment as a deduction but does not handle correspondence, reporting, or payments.
Step-by-Step Guide
1. Understand the Garnishment Order
Receive the Garnishment Order: This will typically come from a court, a government agency, or an authorized legal entity.
Review the Details: Ensure you understand the type of garnishment, the amount to be deducted, and the duration of the garnishment.
2. Notify the Employee
Inform the Employee: Notify the employee in writing that you have received a garnishment order against their wages. Provide them with a copy of the order and explain the process and the amounts that will be deducted.
3. Set Up the Deduction in the Payroll System - Setting up a Garnishment as a deduction Type
Access Payroll Module: Log in to your payroll module and navigate to the Staff payroll settings:
Select the employee, then select the Payroll tab:
Scroll to the Deductions section, click the Add button
Create a Deduction: Set up the garnishment as a deduction. Enter the required details such as the deduction amount, either by percentage or a fixed amount. The amount deducted from the employee will remain uncollected by Workforce and will need to be paid directly to the agency by the employer.
Once the deduction is set, it will become effective for the next payroll period and will persist until it is removed.
The need to add multiple garnishments may be necessary.
Garnishment Order #1
Garnishment Order #2, …
Verify Setup: Ensure that the deduction is correctly set up and will be reflected on the employee’s payslip.
Set up View
Payslip View
4. Maintain Accurate Records
Document the Garnishment: Keep a record of the garnishment order, any communication with the employee, and all actions taken.
It is recommended to add a copy of the order to the employee’s profile in the Staff HR tab, Notes & Files
Track Deductions: Maintain a detailed log of each deduction made from the employee's wages, including the date and amount.
5. Correspondence and Reporting
Regular Reporting: Prepare and send any required reports and or payment coupons to the entity that issued the garnishment order. This could include details of the amounts deducted and remaining balance. If the garnishment balance will extend beyond the calendar year, please ensure that the balance carry’s over.
Maintain Communication: Keep an open line of communication with the garnishing authority to address any questions or issues that may arise.
6. Make Payments
Prepare Payments: Based on the deductions recorded, prepare the payment to be sent to the garnishing authority. The payslip will have the line items for current payment and YTD totals.
Follow Payment Instructions: Adhere to the payment instructions provided in the garnishment order. This could involve mailing a check, making an electronic payment, or following other specified procedures.
Keep Proof of Payment: Retain copies of all payments made for your records.
7. Update the Payroll System as Needed
Adjustments: If there are any changes to the garnishment order, such as an increase or decrease in the deduction amount, promptly update the payroll system. Please make sure that any order adjustment documentation is filed in the employee profile along with the original order. Make use of the notes section
End of Garnishment: Once the garnishment has been fulfilled, remove the deduction from the payroll system to stop further withholdings. Also add any final documentation to the employee profile.
Summary
Handling employee garnishments requires careful attention to detail and compliance with legal requirements. While Workforce can assist with the mechanical process of withholding wages, the responsibility for correspondence, reporting, and payment remains with you, the employer. By following the steps outlined in this guide, you can ensure that garnishments are managed effectively and in compliance with legal obligations.