Garnishment calculation errors are costly in both directions. Withhold too little and the employer can become liable for the shortfall; withhold too much and you have an unlawful deduction claim. The calculation itself is mechanical — the difficulty is knowing which rules apply to which order.
Garnishment limits apply to disposable earnings, not gross pay and not net pay as an employee understands it.
Disposable earnings are gross earnings less deductions required by law — typically federal, state and local income tax, Social Security and Medicare, and mandatory retirement contributions where applicable.
Voluntary deductions do not reduce disposable earnings: health insurance premiums, 401(k) elective deferrals, union dues, charitable giving and life insurance are all excluded from the calculation. Treating net pay as disposable earnings is the single most common error, and it always under-withholds.
Different order types carry different limits.
Under the Consumer Credit Protection Act, the amount subject to garnishment is generally the lesser of 25 percent of disposable earnings, or the amount by which disposable earnings exceed 30 times the federal minimum hourly wage.
Higher limits apply, varying with whether the employee supports another spouse or child and whether payments are in arrears.
Calculated differently again — based on an exempt amount determined by filing status and dependents, with the remainder subject to levy.
Administrative wage garnishment carries its own percentage limits.
State law frequently provides greater protection than federal law, and where it does, the more protective limit applies.
Where an employee has several garnishments, priority matters and is not simply first-come-first-served.
Child support orders generally take priority over most other garnishments. Federal tax levies have their own position, which can depend on whether the levy preceded other orders. Ordinary creditor garnishments typically rank behind both.
Where total withholding under competing orders would exceed the applicable limit, the priority rules determine which are satisfied and which are not — and the employer must apply them rather than splitting the available amount proportionally.
Remit to the address and by the deadline stated in the order. Late remittance can make the employer liable. Record the calculation for each pay period: disposable earnings, the limit applied, the order priority, the amount withheld and the date remitted.
Garnishments are distressing, and payroll is usually the first person the employee speaks to. Handling that conversation well prevents most of the friction.
The key points to convey are that the employer is legally required to comply, that the employer has no discretion over the amount, and that any dispute about the underlying debt must be raised with the issuing court or agency rather than with payroll. Providing a copy of the order and explaining the calculation reduces repeat questions considerably.
Equally important is what not to do: discussing the garnishment with colleagues, or treating the employee differently because of it, creates exposure independent of the garnishment itself.
Withholding continues until the order is satisfied, released or superseded. Payroll should track the balance where the order specifies one, and stop promptly when it is reached — continuing to withhold after satisfaction is an unlawful deduction.
Obtain written confirmation of release where available, and retain it. Employees sometimes assert that an order ended when it has not, and the employer needs documentary evidence either way.
Generally yes — they form part of earnings and therefore of disposable earnings.
Continue withholding under the order. The employee must resolve the dispute with the issuing authority.
Some states permit a small fee. Check state law before applying one.
See how to perform an internal payroll audit — garnishments are one of the areas audits most often find errors.
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