Garnishment Rules You Need to Know

Garnishment Rules You Need to Know

Garnishment Rules You Need to KnowAs 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 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 discharging the worker if there is only one garnishment. However, the law does not prohibit firing if an employee’s earnings are subject to two or more separate garnishments.

Garnishment applies to wages, salaries, commissions, bonuses, and certain other compensation. Recently the U.S. Department of Labor (DOL) changed the definition of “compensation for personal services” (the amount from which garnishment can be taken) to include 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 may 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.

Last year, Tennessee extended garnishment to independent contractors by including them in the definition of employees. Some other states made changes to their garnishment laws:

  • California
  • Georgia
  • South Dakota
  • West Virginia

Other states could make changes, so employers need to stay alert.

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 last year. Now it’s up to the states to adopt it. Follow progress at ULC.


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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