Wage garnishments are court-ordered deductions taken from an employee’s pay to satisfy a debt or legal obligation. Child support, unpaid taxes or credit card debt, defaulted student loans, medical bills and outstanding court fees are common causes for wage garnishments. Garnishments are typically a percentage of an employee’s compensation rather than a set dollar amount.
About 7 percent of U.S. employees have at least one wage garnishment, according to a recent ADP study.
Employers with workers subject to garnishments will receive a “writ of garnishment” from a court or government agency. It is then the employer’s responsibility to regularly calculate, withhold and submit the garnishment to the creditor or agency. Failure to comply with garnishment orders can result in costly penalties for employers.