As an employer, if you receive a garnishment notice naming a specific employee, you must withhold a portion of the worker’s wages and remit the money that will be used to satisfy the worker’s debt. Garnishment usually arises from a worker’s unpaid obligation for child support, taxes, and defaulted student loans (you receive a notice from a federal or state agency), or a private debt that has been reduced to a judgment (you receive a court order).
Federal rules
Garnishment rules for certain types of arrears (e.g., taxes) are governed by the Federal Wage Garnishment Law and the Consumer Credit Protection Act. These laws are designed to protect workers subject to garnishment. They limit the amount that can be withheld and prohibit an employer from discharging the worker if there is only one garnishment. But the law does not prohibit firing if an employee’s earnings are subject to two or more separate garnishments.
Important: On January 16, 2026, the U.S. Department of Education announced a delay in involuntary collections for defaulted student loans. When the pause will end is undetermined at this time.
For a garnishment subject to federal rules, the IRS usually uses Form 668-W-(ICS) or 668-W(ACS). The employee completes parts of the form regarding dependents and filing status to enable the IRS to determine the amount to be garnished. The amount exempt from garnishing is figured using Publication 1494 (not the employee’s W-4).
Garnishment applies to wages, salaries, commissions, bonuses, and certain other compensation. The definition of “compensation for personal services” (the amount from which garnishment can be taken) includes earnings received in lump sums and, for tip employees, cash wages paid directly by the employer.
There are no posters or notice requirements for employers. There is no special recordkeeping required.
Federal garnishment rules are summed up in a DOL Fact Sheet and the Employment Law Guide.
Note: Wage assignments in which a worker voluntarily agrees to have withholding are not garnishments subject to federal or state law.
State laws
States have their own garnishment rules that differ from federal law. If a state wage garnishment law results in a smaller garnishment (greater protection for the employee), an employer must follow state law.
Garnishment for independent contractors? Garnishment rules generally apply to wages paid to employees. But in some states, there can effectively be garnishment from payments made to independent contractors. Legal notices or orders may require garnishment from payments to independent contractors in states, including California, Illinois, and New York.
Uniform Wage Garnishment Act
The American Payroll Association and the Uniform Law Commission (ULC) want to standardize the garnishment process. This will help simplify things for companies operating in more than one state. The Uniform Wage Garnishment Act was passed by the ULC 10 years ago. To date, no state has adopted the uniform law as written, but it was introduced this year in Oklahoma. Follow progress at ULC.
Actions to take
Upon receiving a garnishment notice, an employer must promptly notify the employee—in writing—of the payroll deduction that results from the garnishment. Be specific by listing:
- The legal authority for the garnishment (e.g., a court order regarding back child support); give a copy of the order to the employee.
- When the garnishment will commence
- The amount withheld from the paycheck for the garnishment
Remit the funds withheld to the authority specified in the garnishment notice (e.g., a court for back child support).
Final thought
While the law lays out the limit for the garnishment amount from each paycheck, it’s up to you as the employer to factor in the intangibles of the situation. Keep garnishments private so you don’t embarrass the worker. Monitor the worker’s job performance to make sure his or her financial stresses aren’t negatively impacting what happens on the job. And of course, if you receive a notice of garnishment for an employee, but sure you turn it over to your payroll department or your outside payroll company so you can stay in compliance.
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