Question

Our department has not processed legal or garnishment orders for a number of years. With the recent receipt of numerous orders, management has decided it would be beneficial to remind all payroll practitioners of our obligations under these orders. Please prepare a memo for our payroll department outlining our responsibilities and obligations under a legal or garnishment order.

Answer 1

Memo:

To: All Employees of Payroll Department

From: Payroll Department Manager

CC: CEO and  CFO

Date: 3rd December, 2019

Subject: Responsibilities and obligations of a payroll department under a legal or garnishment order with the recent receipt of numerous orders.

When a debtor owns money to credit, the only option creditor has to secure its debt by obtaining a legal order for garnishment. As an employer, payroll department needs to understand its responsibilities and obligations with the recent receipt of numerous orders. When there are federal laws that govern the garnishment centrally, there are also state laws for garnishment. When, the creditor receives monetary judgement against the debtor, the creditor can return to the court to garnish the debtor's wages. If the order for garnishment is granted, it will be sent to the debtor's employer. The payroll department must become familiar with the federal law and the state law of the place where the wages are earned. Payroll department have to know the maximum amount allowable under the applicable state law. Federal law prohibits the employer for dismissing the employee on the grounds of receiving order for garnishment. The employer may be subject to legal action if dismissed the employee on receipt of first garnishment order. As an employer, the payroll department must deduct first federal and state taxes from employee's pay check to determine employee's disposable earnings. Then, the payroll department will withheld the amount from the paycheck as required by the federal and state laws. The garnishment order may mention the exact amount or the maximum allowable amount to be withheld. The garnishment order will mention where the payments are to be sent. The payroll department has the responsibility to send payments each pay period until the release notice of garnishment is received. The payroll department also need to send certification if the garnishment is due to any federal debt.