Garnishment Withholding Policy

Policy for handling wage garnishments, including court order priorities, withholding limits, employee notification, and payroll processing requirements.

Purpose

• This policy establishes the company's process for receiving, reviewing, prioritizing, calculating, withholding, and remitting wages subject to garnishment orders. It is intended to ensure compliance with the **Fair Labor Standards Act (FLSA)**, the **Consumer Credit Protection Act (15 U.S.C. § 1673)**, and applicable state and local withholding requirements.

Scope

• This policy applies to all employees whose wages are subject to a valid garnishment, levy, attachment, income withholding order, or similar legal directive. It applies to HR, Payroll, Finance, and any manager who receives notice of a garnishment. **California employees:** apply any state-specific limits, exemptions, and notice rules that provide greater protection than federal law. **Other state carve-outs:** where state law requires different priority handling, notice timing, or remittance procedures, the company will follow the applicable law.

Policy Statement

• The company will comply with all lawful garnishment orders received from a court, government agency, or authorized entity. The company will not retaliate against an employee because a garnishment order was received. Wage withholding will be limited to the maximum amount permitted by law, and the company will process orders in the order of legal priority. When multiple orders apply, Payroll will coordinate with Legal or outside counsel as needed to determine the correct withholding sequence and any required proration.

Definitions

• Key terms used in this policy are defined in the **Definitions** section of this template. For operational purposes, the following concepts apply: 1) **Disposable earnings** are calculated before garnishment withholding; 2) **Priority order** determines which withholding obligation is processed first; 3) **Good-faith** compliance requires timely review, accurate calculation, and prompt remittance based on the order and applicable law.

Procedure

• 1. **Receipt and logging:** Any garnishment notice received by an employee, manager, or department must be forwarded to Payroll and HR within one business day. Payroll will log the order, record the date received, identify the issuing authority, and retain a copy in the employee's confidential payroll file. 2. **Validation:** Payroll will verify that the order is facially valid, includes required identifiers, and specifies the withholding amount, start date, and remittance instructions. If information is missing or unclear, Payroll will contact the issuing agency or Legal for clarification. 3. **Priority review:** When multiple withholding orders exist, Payroll will apply the applicable legal priority rules. Typical priority considerations may include child support, tax levies, bankruptcy orders, and creditor garnishments, but the exact sequence must follow the governing law and the specific order language. 4. **Withholding calculation:** Payroll will calculate disposable earnings and withhold no more than the maximum amount allowed by law. If the order requires a lower amount than the legal maximum, Payroll will withhold only the ordered amount. If multiple orders exceed the available amount, Payroll will follow legal priority and document any partial withholding. 5. **Employee notification:** HR or Payroll will notify the employee promptly after receipt and validation of the order, unless the order or law prohibits notice. The notice will explain the general nature of the withholding, the expected start date, and the contact person for questions. The company will not provide legal advice. 6. **Payroll processing:** Payroll will begin withholding on the first practicable payroll cycle after the order is validated and any required notice period has passed. Withheld amounts will be remitted by the deadline stated in the order or required by law. 7. **Recordkeeping:** Payroll will maintain records of the order, calculations, remittances, employee notices, and any correspondence for the period required by law and company retention standards. 8. **Order changes or termination:** If an order is modified, satisfied, suspended, or terminated, Payroll will update withholding only after receiving written notice from the issuing authority or other legally sufficient documentation.

Roles & Responsibilities

• **Payroll:** receives and logs orders, calculates withholding, processes remittances, maintains records, and coordinates corrections. **HR:** supports employee communication, ensures confidential handling of employee information, and escalates disputes or hardship requests to Legal or Payroll leadership. **Legal / Compliance:** reviews ambiguous, conflicting, or high-risk orders; confirms priority rules; and advises on state-specific requirements. **Managers:** must immediately forward any garnishment notice they receive and must not discuss the employee's situation with others. **Employees:** are responsible for promptly reviewing any notice received and for providing updated contact information if needed.

Compliance / Discipline

• Failure to follow this policy may result in payroll errors, legal penalties, or disciplinary action up to and including termination, depending on the severity of the violation and applicable law. Examples of policy violations include failing to forward a garnishment notice, altering withholding calculations without authorization, disclosing confidential employee information, or delaying remittance without a valid reason. Any disciplinary action will be administered in a documented, good-faith manner consistent with company policy and applicable law.

Review & Revision

• This policy will be reviewed at least annually and whenever there is a material change in federal or state garnishment law, payroll systems, or court-ordered withholding procedures. Revisions must be approved by HR, Payroll leadership, and Legal or Compliance before publication.