Under California’s wage garnishment law, you can be required to withhold part of an employee’s wages to pay a bill collector, ex-spouse or other creditor. A new change in the law lets you charge employees a small fee every time you make a payment based on a garnishment order. Here’s a quick refresher on your compliance obligations.
Wage Garnishment Basics
In general, earnings that can be garnished include an employee’s salary, wages, commissions, bonuses and other compensation. You’ll typically receive an official “Earnings Withholding Order” form specifying the amount the employee owes. The front and back of the form contain detailed instructions on what you need to do, including strict time limits you must observe, so be sure to read the document carefully. There are special rules about the maximum amount you can withhold and what to do when you receive multiple garnishments.
The HR Management & Compliance Report: How To Comply with California Wage & Hour Law, explains everything you need to know to stay in compliance with the state’s complex and ever-changing rules, laws, and regulations in this area. Coverage on bonuses, meal and rest breaks, overtime, alternative workweeks, final paychecks, and more.
Violations of the law carry stiff penalties including possible imprisonment.
And most employers don’t realize that if you fail to withhold earnings covered by a garnishment order, the employee’s creditor can come after you for the money.
Also, note that it’s illegal to fire someone because you have received earnings withholding orders, regardless of how many, for a single debt. And, al- though there’s nothing to stop you from disciplining or terminating an employee who repeatedly has their wages garnished for multiple debts, before taking action be sure you aren’t at risk for any discrimination, retaliation or wrongful termination claims.
New Fee Allowed
Beginning January 1, 1998, you have the right to deduct a $1 fee from an employee’s paycheck every time you comply with a withholding order. This is the same amount you can charge for complying with wage assignments for child support. It’s a good idea to notify employees in advance that you have received the withholding order, the date and amount of the first deduction, and the fee you are going to charge.