This article was updated on July 19, 2018.

Wage garnishment can be a negative experience for the employee, which in turn can make it negative for employers. For employers, employee wage garnishment can put organizations in the middle of a situation that in many respects, is beyond their control. Additionally, they must balance payment obligations to workers against legal obligations from state and federal laws and court orders that compel employers to deduct a portion of employee's wages to satisfy judgment creditors, custodial parents and tax and other agencies. If the employer fails to comply with the applicable garnishment and other laws or the garnishment order, the employer may find itself (in some states) fully liable for the employee's wage garnishment, with potential civil penalties in the mix.

According to the ADP Research Institute® (ADP RI) report, Garnishment: The Untold Story, businesses are confronted with a difficult challenge: "For employers, garnishment presents a challenge of balancing consistent, compassionate care of employees with an obligation to comply with varying wage garnishment requirements."

Impact on Garnished Employee

According to the ADP RI report, which looked at a data set of some 13 million employees, 7.2 percent of these employees have their wages garnished. That percentage of garnished employees is even higher among the 35-to-44-year-old group of employees, who face an eye-opening 10.5 percent garnishment rate. Gender and business sector play a role too: men are far more likely to be garnished for child support than women, and more blue collar workers in manufacturing and construction have their wages garnished than white collar workers in service industries.

While the underlying debt of the garnished employee may be related to taxes, child support or bankruptcy, the behavioral result can be the same: employee's financial stress that can, according to the ADP RI report, potentially transform into workplace distraction and a drop in productivity. These negative impacts can ripple outward and create a distracted, stressed employee who may be less able to work well with colleagues and who could potentially contaminate the corporate climate (and hurt your bottom line).

"The impact of wage garnishment on employees extends beyond their paychecks," explains the report, "and into every aspect of their lives. Employees often find it humiliating, because the courts have had to intervene and employers have become involved in their otherwise private struggles. Employees in this position may feel they no longer work for themselves and their futures, but for the institutions to which they are indebted. Stress and anxiety are natural outcomes."

Helping Employees Stay Engaged While Ensuring Compliance

When it comes to employer compliance with garnishment orders, having strong systems in place that can adapt to fast-evolving legal changes in multiple jurisdictions is critical. Compliance gaps in this area, as in so many others, can expose you to costly legal liability and a damaged reputation.

As for keeping employees subject to garnishments motivated, an employer may need to be equally proactive in mitigating worker anxiety while ensuring compliance. As the ADP RI report reminds us, employers will likely "feel the brunt of this employee anxiety in the form of decreased worker productivity and overall lack of motivation." It may be in the employer's best interest to bring training and support to bear on the problem, showing impacted employees that you care by helping them manage their debt and avoid future garnishments.

Financial counseling can directly help employees and indirectly help the organization by giving workers a sense of control that allows them to be productive. "By making a financial wellness expert available to provide counsel — offering budget education and establishing preventive financial wellness training — some employers seek to minimize the negative effects of wage garnishment and help employees manage debt."

At the end of the day, a comprehensive approach may help employers handle the delicate balancing act forced upon them by the garnishment laws. Of course, organizations must protect themselves against unwarranted liability and thus comply with the garnishment laws, but they may wish to do so with an eye toward keeping potentially distressed employees engaged in their work. Balancing compliance with compassion isn't easy, but it could be the best way to keep your garnished employees productive while you follow the law.

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