Can you fire an employee for too many garnishments?
December 31, 2008 by Jim GiulianoPosted in: Employment law, In this week's e-newsletter, Latest News & Views, Money
With the tight economy, creditors are stepping up wage-garnishment actions. So, what can an employer do if an employee piles up three garnishments? Four? Five? Ten?
Different states have different regulations on the matter, but most follow federal law.
The federal Consumer Credit Protection Act bars an employer from firing any employee because of a garnishment for any one indebtedness. Violation of the act can lead to more than a slap on the wrist: Criminal penalties can run up to fines of $1,000 or even imprisonment for the company official who’s responsible. On top of that, some federal courts have OK’d employee lawsuits seeking back pay.
What’s ‘one indebtedness’?
It’s important that employers understand the meaning of “one indebtedness,” since a misinterpretation can lead to violations.
The term refers to a single debt, regardless of the number of levies made or the number of proceedings brought for its collection. So, a single creditor, could take action to garnish wages on multiple occasions, but the law says it’s still only one indebtedness.
What if several creditors combine their debts in a single garnishment action? That’s still considered one indebtedness. Also, if a creditor joins several debts in a court action to obtain garnishment, the judgment would be considered a single indebtedness for purposes of the law.
Note: The one-indebtedness rule kicks in each time someone gets hired — meaning previous garnishments under previous employers can’t be factored in. Or if an employee leaves and then you rehire, that’s treated as a new hire — and previous garnishments during the previous period of employment are wiped out.
January 5th, 2009 at 4:36 pm
Are employers required to garnish an employee’s wages with more than one debtor (indebtedness). Or can an employer refuse to garnish more than one? If so, how do we proceed with the debtor?
January 7th, 2009 at 9:40 am
It is my understanding that you are required to act upon any garnishment issued to you as the employer. The employer is not the one actually garnishing the employee’s funds–it is the debtor or the court. I cannot emphasize enough about READING the paperwork you get on the garnishment order. In most states, it is illegal to take more than 60 percent of the employee’s paycheck each pay period (and that is for child support). In Ohio, the court garnishments are coming out to equal no more the 25% of the debtor’s “disposable earnings” per paycheck until the debt is clear. In child support cases, if you have two or more child support orders, the total cannot exceed either 55% or 60%, depending on whether or not the employee has a current family to support. So the orders are prorated to equal the percentage for each order, not to exceed the maximum. An example, I had an employee with four child support orders which were all prorated because he didn’t make enough money to pay each of them in full. Then, I received a fifth order from another state. That caused all of the others to receive reduced amounts to be paid to them. When I received a medical support order on top of all of this, I called and the state agency terminated the medical support order officially because they wouldn’t receive any coverage under that order anyway.
January 13th, 2009 at 5:53 pm
What happens if you get so many garnishments that it takes the employee below minimum wage?
January 13th, 2009 at 9:53 pm
If you (as the employer) are served with more than one garnishment, you must act upon it. If the garnishment follows other garnishments with priorities (i.e. child support takes precedence), then you only need compute what amount if any can be paid on the garnishment. Normally, minimum wage is part of the computation and the paperwork you receive from the court or agency will explain, in detail, how to compute the amount to be paid. If you are EVER in doubt or do not understand, call the number provided on the garnishment and they will walk you through it. However, minimum wage is NOT part of a computation in a child support garnishment. If there is not enough cash available for the garnishments, then you must notify the court or other garnishing authority. Phone calls help in understanding your obligations as an employer. Seek the answers directly from the garnishing authorities. They are usually most helpful.