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Wage Garnishments: Could you be in danger of paying your employees' credit card debt?
By Molly Batsch on June 19, 2013 at 6:00 PM

Hands giving moneyIn today’s economy, employers are receiving orders to garnish employee wages on an increasingly frequent basis. Causing even bigger headaches are situations in which multiple garnishments are received for the same employee. For example, it is not unusual for an employee to be subject to both a defaulted student loan and a child support order at the same time. And, if a garnishment order is ignored or interpreted incorrectly, your Company could be liable for your employee’s debt, in addition to legal fees and sometimes penalties! On the other hand, you could be obligated to repay your employee if you withhold too much!

So what’s an employer to do to minimize liability and ensure compliance? 

Due to the complicated nature of federal and state garnishment law, and the frequent interplay of tax and bankruptcy issues, the best practice is to develop consistent payroll procedures for handling garnishment orders and work with an attorney to resolve any uncertainties.

The following are some topics that are particularly important when evaluating a garnishment order:

Withholding Limits:

Federal law limits the amount you may withhold from your employee’s wages to repay a creditor debt. Specifically, you can withhold the lesser of:

  • 25% of disposable earnings (gross earnings minus required deductions)
  • The amount by which disposable earnings are greater than 30 times the federal minimum hourly wage.

States also impose withholding limits, some of which are lower than the federal limits. For example, while Missouri sets a general withholding limit of 25% to repay creditor debt, this limit is decreased to 10% if the employee is a head of household under Missouri law.


Employers sometimes make the mistake of assuming that the first garnishment received takes priority over later garnishments. This is not necessarily the case. For example, child support orders generally take priority over other garnishments, even if received at a later time. Determining priority becomes particularly important when an employee’s disposable earnings are not sufficient to satisfy all applicable garnishments.

Termination and Discipline:

Federal law protects employees from being discharged by their employers because their wages have been garnished for one debt, but does not protect an employee from discharge if the employee’s earnings have been subject to a second debt. It is important to consult applicable state law to determine if any additional employee protections apply.


Missouri employee Martha has disposable earnings of $300 per week, and is not a head of household. Missouri employer ABC Corp. receives a creditor garnishment in July 2013 to withhold 10% of disposable earnings and another creditor garnishment in August 2013 to withhold 15% of disposable earnings. In September 2013, ABC Corp. receives a child support order for Martha, requiring withholdings of $60 per pay period. What should ABC Corp. do upon receiving the child support order?

Even though the child support order was received after the creditor garnishments, child support orders take priority over creditor garnishments. ABC should therefore first garnish $60 per pay period pursuant to the child support order. Because Martha is not a head of household, an aggregate of 25% of disposable earnings (or $75 per pay period) can be garnished. Therefore, at this time, ABC Corp. should garnish only $15 per pay period under the first creditor garnishment received, and should not garnish any wages under the second creditor garnishment.

Sound complicated? It can be. But taking the time to carefully keep track of each garnishment received, calculate the proper amount to be withheld, and promptly consult a professional with any questions will avoid a much bigger headache later on.

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