Last updated: August 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. Every deadline that follows is set by the order itself or by the law that issued it, so read them off the paperwork rather than assuming you have time.

The mechanism is the point: for a support order and for a federal tax levy, an employer who fails to withhold becomes liable for the amount that should have been withheld. The debt starts as the worker's. It becomes the company's.

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 and state tax levies. Federal student loan collection is not a writ at all: 20 U.S.C. 1095a lets the Department of Education garnish without a court judgment, and 34 CFR 34.4(c) has the Department mailing a notice rather than a court issuing process. 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, but no single federal rule covers all three. Title III of the Consumer Credit Protection Act caps what you may withhold and bars discharge for any one indebtedness; it creates no employer liability for failing to withhold. For a support order, 42 U.S.C. 666(b)(6)(C) makes an employer who fails to withhold under a valid IWO liable for the full amount that should have been withheld. For a federal tax levy, 26 U.S.C. 6332(d)(1) makes the employer liable for the amount not surrendered and 6332(d)(2) adds a penalty of 50 percent of it. For a creditor writ, the liability is created by state law and enforced by the court that issued the writ, so look up your own state's rule rather than budgeting from a national number.

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 what you will use to run every deadline that follows, and what you will point to if the date of receipt is ever disputed.

For an IWO, the start deadline is printed on the form by the issuing state, not set by federal law, so read it off the order. The seven business day remittance after each payday is federal and applies everywhere. For a creditor writ, the deadline to answer and the deadline to begin withholding are both set by state law. Read the writ, then confirm both dates with the issuing court before the clock runs. 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. The liability that follows is the one set by the statute behind that particular order, not a single federal rule.

The exception worth naming: a facially defective order. If an IWO is missing the issuing agency signature, the case number, or the employee identifier, do not process it on the assumption it is valid. Call the issuing agency and confirm what is missing, then return it to the sender with a written note if it cannot be corrected. Do not assume defect and do not discard it.

Calculating Disposable Earnings Without Getting It Wrong

Disposable earnings is the figure the whole calculation rests on, and it is not take home pay. 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 can tighten these ceilings. Under 15 U.S.C. 1673(c) a state may leave more of the paycheck with the worker than the federal rule does, by any method it chooses, and nothing in Title III constrains the shape of that rule. There is no shortcut here: look up the rule for the state where the employee works.

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 the situation with the most exposure. There is no single federal rule to follow. The CCPA sets no priorities at all: 29 CFR 870.1(a) puts that outside the Secretary's duties, and 29 CFR 870.11(b)(2) says priority is determined by state law or by another federal statute. The federal part is narrow, and it is this.

Child support beats any state tax levy or creditor writ no matter the timing. That is 42 U.S.C. 666(b)(7), which gives support priority over any other legal process under state law. A federal tax levy is federal process, so that provision does not reach it. A levy already in effect when the support order arrives keeps its place, because 26 U.S.C. 6334(a)(8) exempts only a support judgment entered before the date of levy. Support judgment first, and it is exempt from the levy. Support judgment second, and it is not. The IWO form tells you to notify the sender when a federal tax levy is in effect, which is the step to take rather than ranking the two yourself. If two child support orders cover the same worker and the combined total exceeds the CCPA ceiling, no federal formula divides it for you; under 29 CFR 870.11(b)(2) that allocation is a question of state law, so use the method your state or the order specifies.

Below that, ordering is a question of state law rather than federal law. Confirm your state's rule before you assume a sequence.

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.

Child support and a federal tax levy go to different places by different mechanisms. Keep them apart in your process.

Child support goes to the State Disbursement Unit within 7 business days of the pay date, under 42 U.S.C. 666(b)(6)(A)(i) and 45 CFR 303.100(e)(1)(ii). Whether your state accepts a paper check or requires EFT or EDI through its portal is a state rule, so check it rather than assuming a check is acceptable.

A federal tax levy goes nowhere near that path. You surrender the withheld amount to the Secretary under 26 U.S.C. 6332(a), following the instructions that come with Form 668-W, on your regular payday cycle. Publication 15 says the same thing: on a Notice of Levy in the Form 668 series you withhold as the instructions for those forms describe. Do not send levy proceeds through EFTPS. EFTPS is the deposit channel for your own 941 and 940 liabilities, and routing an employee's levied wages through it posts their money to your tax account. The employee stays levied and you have a misapplied deposit to unwind.

For a creditor writ, the writ itself names the payee. Send the funds where it directs and nowhere else.

Whether you may charge the worker an administrative fee for processing the withholding, and how it is calculated, is set by state law, so check your state before you charge it. Where a fee is allowed, it comes out of the worker's remaining wages, not the garnished amount.

Keep the original order, every withholding record, every remittance confirmation, and every piece of correspondence. Set the retention period from your state's record-keeping rule rather than a national default, and confirm it before you write the policy.

The Order for Someone Who Does Not Work Here

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 whether you owe a written answer, and what happens if you do not file one, are set by the state whose court issued the writ. Read the writ for the answer deadline, and call the issuing court if it does not state one. Do not decide on your own that an order for someone who is not on your payroll needs no response.

The response costs nothing, and it is the only one of the two options whose consequences you can see in advance.

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 garnishment for any one indebtedness. That bar does not by its terms reach a second distinct debt, and state law may go further. Under 15 U.S.C. 1674(b) a willful discharge in violation of that section is punishable by a fine of not more than $1,000, imprisonment of not more than a year, or both. Any further remedy is a question of the state where the worker is employed.

If the worker is rehired, check with the issuing agency or court whether the original order is still live before treating it as closed. Do not assume a new order is needed.

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.

Whether your payroll platform has a garnishment module at all, and whether it handles order intake and the calculation or leaves both to you, is a question for your provider rather than something to assume. Ask before your next cycle runs, and compare options at the payroll providers hub.

Send the employee the notice your state requires, on the deadline your state sets. 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 or wants 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 agency's own summary of the federal withholding limits.

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.

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