Last updated: April 2026

Employer Garnishment Obligations: What the Law Actually Requires

Your employer garnishment obligations begin the moment that envelope hits your mailbox. Ignore it and you inherit the debt. There is no grace period, no extension, no benefit of the doubt.

A 12 person landscaping company got hit with a $41,000 default judgment because the owner threw a child support Income Withholding Order in a drawer for six weeks. The debt was not his. It became his.

Why the Paperwork on Your Desk Is a Legal Deadline

A wage garnishment order is a court or agency directive, not a request. When a creditor, a state child support unit, or the IRS serves you, you become a stakeholder in that debt. The legal term is garnishee. You hold money that belongs to your worker, and the issuing authority now has a claim on a portion of it.

Three documents account for nearly every garnishment a small employer sees. The Income Withholding for Support order (IWO, OMB form 0970-0154) covers child and spousal support. A writ of garnishment covers civil creditor judgments, student loans, and state tax levies. IRS Form 668-W covers federal tax levies.

Each one looks different.

Each one carries the same weight.

The penalties for ignoring these are not theoretical. Under the federal Consumer Credit Protection Act and parallel state statutes, an employer who fails to withhold becomes personally liable for the full unpaid amount plus interest, plus in many jurisdictions a separate civil penalty. Texas caps the per violation fine at $200. Illinois lets the court enter judgment for the entire arrearage. California adds a $500 sanction on top.

Receiving an Order and the Clock That Just Started

The first rule is simple. Date stamp the envelope the day it arrives. That timestamp is your proof of service and the starting line for every deadline that follows.

For an IWO, federal law gives you 10 business days to begin withholding from the first pay period after receipt, and seven business days after each payday to remit. For a creditor writ, state rules vary widely. Florida gives you 20 days to file an answer with the court.

Ohio gives you five business days to begin withholding and 30 days to respond to the interrogatories. New York requires compliance within 20 days of service. An IRS 668-W requires withholding on the very next payday and a completed Statement of Exemptions returned within three working days.

Miss any of these and the order does not go away. It mutates into a judgment against the company.

The exception worth naming: a facially defective order. If an IWO is missing the issuing agency signature, the case number, or the employee identifier, you are allowed, and in some states required, to return it unprocessed with a written objection. Do not assume defect. Call the issuing agency and confirm before rejecting anything.

Calculating Disposable Earnings Without Getting It Wrong

Disposable earnings is where most payroll clerks blow the math. The federal definition is gross pay minus amounts required by law to be withheld. That means federal income tax, Social Security, Medicare, state income tax, and mandatory state disability or unemployment contributions come out first. Health insurance, 401(k) contributions, union dues, and loan repayments do not reduce disposable earnings under federal law, even though they reduce the check the worker actually sees.

Once you have disposable earnings, the withholding ceiling depends on the debt type. Consumer debt garnishments under federal law cap at 25 percent of disposable earnings. The alternate cap is the amount by which disposable earnings exceed 30 times the federal minimum wage, whichever is less. Child support ceilings work in four brackets. The cap is 50 percent when the worker supports a second family and is current. It rises to 55 percent when the worker supports a second family and is more than 12 weeks in arrears. It is 60 percent when there is no second family. It reaches 65 percent when there is no second family and the worker is more than 12 weeks behind. Federal tax levies use the IRS exemption table on the back of Form 668-W. That table leaves the worker a set amount based on filing status and dependents, then takes everything above that.

State law often tightens these ceilings. North Carolina, Pennsylvania, South Carolina, and Texas prohibit most consumer debt garnishment entirely. California caps creditor garnishments at the lower of two figures. One is 20 percent of disposable earnings. The other is 40 percent of the amount by which weekly disposable earnings exceed 48 times the state minimum wage. New York uses 10 percent of gross or 25 percent of disposable, whichever is less, for most judgment creditors.

Apply the state ceiling if it gives the worker more protection. Apply the federal ceiling if it does.

Always favor the worker. That is the rule across every jurisdiction.

Priority Ordering When Multiple Orders Stack Up

Multiple orders on the same worker is where small employers panic. The rule is sequential, not proportional. Priority goes like this.

Child support sits at the top, always. Federal law places it ahead of every other garnishment regardless of when the other orders arrived. If two child support orders cover the same worker and the combined total exceeds the CCPA ceiling, you prorate between them. The split is based on the current support amount in each order. A federal tax levy that arrived before the child support order keeps its priority spot above that single child support order. Child support still beats any state tax levy or creditor writ no matter the timing.

Below child support, the order is chronological. First served, first paid, until the aggregate ceiling is reached.

Bankruptcy changes everything. If the employee files Chapter 7 or Chapter 13, the automatic stay under 11 U.S.C. 362 halts every non support garnishment immediately.

Keep withholding child support. Stop withholding creditor garnishments the pay period you receive the bankruptcy notice and return the held funds to the Chapter 13 trustee per the plan. Getting this wrong creates a stay violation and personal liability for the payroll processor who kept withholding.

Remittance, Record Keeping, and the Administrative Fee

Send the money where the order tells you to send it. For child support in every state, that means the State Disbursement Unit, never directly to the custodial parent. Federal law has required SDU processing since 1996 and sending a check to a parent directly exposes the employer to a double payment claim from the state.

For creditor writs, the clerk of court or a named attorney receives the funds. For IRS levies, you remit on the normal federal tax deposit schedule using EFTPS with the levy account reference.

Most states let you charge the worker a small administrative fee for processing the withholding. Florida allows $5 for the first deduction and $2 thereafter. Texas permits $10 per month.

Indiana lets you take $12 or 3 percent of the amount withheld, whichever is greater, per pay period. Illinois allows 2 percent. The fee comes out of the worker's remaining wages, not the garnished amount. If you do not collect it, you lose it, because it is not recoverable later.

Keep the original order, every withholding record, every remittance confirmation, and every piece of correspondence for at least three years past the order termination date. Longer in states with extended audit windows. Wisconsin gives the Department of Workforce Development up to six years to audit.

The Gotcha Nobody Warns You About

A former employee walks out. Two weeks later, an IWO for that person arrives in the mail. You toss it. Why respond to a garnishment for somebody who no longer works there?

Because 23 states require a written answer even when the named worker is not, or never was, on your payroll. Ohio, Michigan, Florida, Georgia, Indiana, and Illinois all impose default judgment if the employer stays silent. Ohio Revised Code 2716.21 gives you five business days to file an answer stating that the person is not employed there. Fail to answer and the court can enter judgment against the company for the full debt, because silence is treated as an admission that you hold the worker's wages.

This is the single most expensive trap in garnishment administration. The response costs nothing. Ignoring the letter can cost the full judgment.

Every order gets a response. Even the ones that do not apply.

Termination Notices, Retaliation, and Rehires

When a worker with an active garnishment quits or is terminated, you owe the issuing agency a notice. For IWOs, you use the termination section on the OMB 0970-0154 form itself and send it within 10 days of the last paycheck. The notice must include the last known address, the last payment date, and any new employer information if you have it.

Retaliation against an employee for a garnishment is illegal. Federal CCPA Section 304 prohibits termination because of a single garnishment for any one indebtedness. A second distinct debt can trigger legitimate dismissal under federal law in some cases, but most states are stricter. Connecticut, New York, and the District of Columbia prohibit dismissal based on any number of garnishments. Violating the anti retaliation rule exposes the employer to reinstatement, back pay, punitive damages, and in some states criminal misdemeanor charges.

If the worker returns within 90 days in most jurisdictions, you typically must resume withholding on the same order without waiting for a new one to be issued.

Your Action Plan for the Next 72 Hours

If an order is sitting on your desk right now, here is what to do before you clock out today.

Date stamp it. Photocopy it. Put the original in a locked file and the copy in the payroll processing queue. Open the order and find three things: the debt type, the issuing authority, and the first required action date. Write that date on a calendar you actually check.

Calculate disposable earnings for the affected worker using the current pay period, not a hypothetical one. Run the federal cap and your state cap and use the lower number. Update your payroll software with the deduction.

Gusto, Rippling, ADP RUN, and Paychex Flex all have a dedicated garnishment module. If you process payroll yourself, a modern provider pays for itself the first time an order arrives. Compare options at the payroll providers hub before your next cycle runs.

Send the employee the notice your state requires, usually within three days of starting the withholding. Keep the signed acknowledgment.

If the order is a child support IWO and you are unsure about the arrears percentage, read our walkthrough on child support garnishment before running the math. If the worker has questions about protected income, send them to garnishment exemptions. If they want to fight the underlying judgment, point them to how to stop wage garnishment. For broader context on the whole process, start at the wage garnishment hub.

For the federal rules in their original form, read the DOL Fact Sheet #30 on the Consumer Credit Protection Act. It is the single authoritative source on federal withholding limits and runs about five pages.

When the debt is large, the worker is disputing service, or multiple orders have stacked up in a confusing sequence, get an employment attorney on the phone the same day. The consultation fee is always less than the default judgment.

This is not legal or financial advice. Consult a qualified professional for your specific situation.