Wage garnishment rules explained: Guidelines for employers

Wage garnishments are among the most complex and sensitive payroll issues employers and employees face. Court and agency-ordered garnishments cover numerous debts and financial obligations, from child support to unpaid taxes. HR managers must navigate federal and state regulations while respecting employees' dignity and privacy. Failure to manage garnishments properly can lead to costly mistakes and potential compliance risks for the employer, regardless of whether the employee's finances caused the garnishment.

In this guide, we’ll break down the critical payroll garnishment rules you need to know. From understanding the different types of garnishments and their limits to clarifying your responsibilities, we’ll provide the insights necessary to ensure legal compliance and avoid payroll errors. By understanding these rules, you can protect your organization while ensuring fair treatment for employees.

What is wage garnishment?

Wage garnishment is a legal process where employers withhold a portion of an employee’s paycheck to pay off a debt as required by a court order or government agency. Typical reasons include child support, alimony, back taxes, court judgments, and student loans. The employer is legally responsible for deducting the funds as directed by the order and remitting them to the relevant agency or creditor until the debt is paid or the order is lifted. 

Both the employee and employer have legal obligations. Employers must follow federal and state laws limiting how much an employee’s earnings can be garnished, protecting a portion of their income, while employees must comply with the order. HR managers need to clearly understand these regulations in order to manage garnishments correctly, prevent legal issues, and ensure accurate payroll. 

How does wage garnishment work?

When an employee fails to repay a debt, the creditor can petition a court to garnish the employee's wages to satisfy the debt. If the court agrees, it issues a judgment, grants a garnishment order, and sends it to the debtor’s employer. This legally obligates the employer to withhold a specified amount from the employee’s paycheck. Federal agencies like the IRS and state tax agencies can garnish wages without a court order through administrative levies.

The amount of the garnishment depends on several factors, including the type of debt, length of default, and ability to pay. It can be a percentage of the debt or a fixed amount, depending on the order and applicable legal limits, which vary by jurisdiction. The employer sends the withheld funds to either the creditor or court until the debt is paid off, the order is revoked, or the garnishment period concludes. The court or issuing agency usually issues a notice when the garnishment order ends. 

Employers must follow withholding limits set by federal and state laws and provide employees with required notices. Failure to do so can result in penalties and, in some cases, liability for the debt. In addition, employers aren’t allowed to take punitive actions (e.g., reduced hours, termination) against employees subject to wage garnishment. 

Types of wage garnishment

HR managers must understand the different types of wage garnishment to manage payroll effectively and comply with legal requirements. The federal Consumer Credit Protection Act (CCPA) limits the amount that employers may withhold and protects employees from termination because of garnishment. Here are six types of wage garnishment that employers may face:

Creditor garnishments

Creditor garnishments occur when an employer is ordered to withhold a portion of an employee’s wages to pay debts such as medical or credit card bills. These garnishments usually require a court order. The amounts can vary depending on the debt type and applicable laws. 

Student loans

Student loan garnishment involves withholding a portion of an employee's wages to repay defaulted federal student loans.

Tax levies

The IRS and state tax agencies use tax levies to collect unpaid taxes. The IRS can garnish wages without a court order, and the amount deducted depends on several variables, including the employee's number of dependents. Employers are legally required to comply with IRS notices to levy.

Child support orders

Child support garnishments are used to enforce payment of child support orders. These garnishments require a court order. 

Alimony payments

Alimony garnishments involve withholding wages to enforce spousal support payments ordered by a court. Similar to child support, these garnishments require a court order.

Court-ordered fines

Court-ordered fines can also result in wage garnishment. This type of garnishment is used to collect fines imposed by a court for various offenses. The amount garnished can vary based on the specific court order and the nature of the offense.

What percentage of an employee’s wages can be garnished?

In the US, the percentage of an employee's paycheck that can be garnished varies significantly depending on the type of debt. While the Consumer Credit Protection Act outlines allowable amounts, state laws can also play a role. 

Understanding both is key, as some states offer additional protections or have different garnishment limits. In all cases, employees are entitled to retain a portion of their paycheck for living expenses, regardless of the debt they owe. Here are common types of debt and the corresponding garnishment limits:

• Ordinary (consumer) debts: For debts like credit card bills, the maximum garnishment is 25% of disposable earnings or the amount by which earnings exceed 30 times the federal minimum wage ($7.25 per hour), whichever is less. For example, if an employee is paid weekly and their disposable earnings are $217.50 ($7.25 x 30) or less, wage garnishment is not permitted. If their earnings are over $217.50 but less than $290 ($7.25 x 40), the amount over $217.50 can be garnished. If their earnings are above $290, the maximum rate of 25% applies. In situations where pay periods span more than one week, the weekly restrictions are multiplied to determine the maximum amount.
• Alimony or child support: These types of debt are subject to much stricter garnishment. The Consumer Credit Protection Act determines the amount withheld based on different factors. If the debtor is not supporting another spouse or child, up to 60% of their disposable earnings can be garnished. If they are more than 12 weeks behind on payments, this can increase to 65%. If they support another family, the limit is 50%, rising to 55% if payments are significantly overdue.
• Student loans: The Department of Education can garnish up to 15% of disposable income for defaulted federal student loans. Withholding is also subject to the wage garnishment provisions of the CCPA but not state garnishment laws.
• Unpaid taxes/levies: The IRS determines wage garnishment for unpaid taxes based on factors like the number of dependents, the debtor’s financial situation, and filing status. Typically, the amounts are between 25% to 50% of disposable income. The IRS can garnish wages without a court order.
• Court-ordered fines: Courts can use wage garnishment to collect fines. The amount varies based on the offense and the court order. Under the CCPA, the maximum garnishment is 25% of disposable earnings or the amount by which earnings exceed 30 times the federal minimum wage ($7.25 per hour), whichever is less. 

Wage garnishment rules

Wage garnishment involves complex federal and, in some cases, state legal obligations for employers. These are the most important wage garnishment rules that you need to be aware of. Check your individual situation for other federal or state regulations that may apply. 

• Protection from termination: Federal law (CPPA) prohibits an employer from firing an employee whose earnings are subject to garnishment for any one debt, regardless of the number of levies made or proceedings brought to collect the debt. This prevents employees from being unfairly penalized for financial hardships beyond their control.
• Maximum garnishment limit: For ordinary and consumer debts, federal law sets a maximum amount that can be garnished in any workweek or pay period. This is typically 25% but depends on disposable earnings, as noted in the preceding section. For other debts, like child support and alimony, the garnishment amount can be as high as 65%. However, employees must receive enough income to meet basic needs. Consult applicable federal and state regulations for limits that apply to your employee’s situation. 
• Prioritization of garnishments: Employers must prioritize garnishments according to federal and state laws. Here is a typical order of priority:
• Child and family support
• Federal tax debts
• Other federal debts (e.g., student loans) 
• State and local debts

Always check with federal and state officials to clarify garnishment priority. 

• Record keeping and confidentiality: Employers are responsible for maintaining accurate records of garnishment orders and payments as well as ensuring employee privacy.

Wage garnishment process for employers

Employers face a delicate balance when dealing with wage garnishment orders. You must comply with federal and state legal requirements while respecting employee privacy and managing potential embarrassment. If your organization receives a garnishment order, follow these steps. Failure to do so can result in legal penalties.

Step 1: Notify the employee of the garnishment

You must notify the employee promptly about the wage garnishment order. This helps maintain transparency and makes sure the employee understands the process. The situation needs to be handled sensitively, as it involves personal financial information. You may also provide information on how the employee can challenge the garnishment.

Step 2: Calculate the amount to be withheld from the employee’s paycheck

Employers must calculate the amount to be withheld based on the garnishment order and federal and state law. Different types of garnishments have specific rules to follow when making these calculations, so it’s crucial to ensure you're doing it correctly.

Step 3: Deduct the appropriate amount from the employee’s paycheck

Once you’ve calculated the amount, you must deduct it from the employee's paycheck on the first pay date following receipt of the garnishment order. This deduction should continue until you receive a notice to stop. 

Step 4: Remit withheld funds to the appropriate party

Employers are responsible for sending the withheld funds to the creditor or agency specified in the garnishment order. This should be done promptly, usually within a specified timeframe after the withholding.

Step 5: Keep accurate records of the garnishment

Your organization must maintain detailed records of the garnishment, including the amount withheld, payment dates, and any communications with the creditor or employee. These records are essential for federal and state compliance and any potential audits. 

Step 6: Respond to inquiries and updates and notify parties of relevant changes

Be prepared to respond to inquiries from the creditor, employee, or court regarding the garnishment. This includes providing updates on payments and addressing any disputes or changes in the garnishment order. You must also notify the creditor or legal authority of changes to the employee's employment status, such as termination or resignation.

Step 7: Terminate garnishment upon notice

Employers are required to stop withholding wages upon receiving a notice of termination. This notice is issued when the debt is paid, or the garnishment order ends. It ensures legal compliance and prevents unnecessary deductions.

Step 8: Stay updated on federal and state garnishment regulations

Employers should stay informed about changes in federal and state wage garnishment laws. Regularly reviewing updates to federal and state regulations can help you remain compliant and avoid potential legal issues. This includes understanding how changes in minimum wage laws may affect garnishment thresholds. 

Step 9: Leverage payroll platforms

Organizations can use payroll platforms such as Rippling to simplify the wage garnishment process and maintain compliance with federal and state laws.

Can someone withhold a paycheck without a garnishee notice? 

Wage garnishment laws vary by state, and while some situations allow garnishment without a court order, like federal student loans or child support, notification is typically required before an employee’s paycheck can be garnished. The IRS, for example, doesn’t require a court order, but they must send a notice before garnishing wages.

Withholding an entire paycheck without authorization is considered wage theft and is illegal. Employers may only withhold specifically authorized amounts for debts such as child support, alimony, or other court-ordered payments. While employers are not legally required to notify employees of a garnishment order, it is considered a best practice to do so.

Can an employer refuse to garnish wages?

The short answer? No. Under federal and state laws, employers have clear obligations regarding wage garnishment. Garnishment orders, regardless of the source, are legally binding, and as such an employer cannot refuse to garnish wages, even if the employee’s remaining earnings are below minimum wage. 

Employers must continue to garnish wages until they receive official notice to stop. This can occur when the debt is paid off or the garnishment order is revoked. 

The Consumer Credit Protection Act prohibits employers from disciplining or terminating employees for one wage garnishment (as a single debt) per calendar year. This protection does not cover employees with multiple wage garnishments, although some states may offer additional protection. 

Failure to comply can result in severe penalties, including contempt of court and financial consequences.

Automate wage garnishments with Rippling

Rippling is a comprehensive HR, finance, and IT software platform that streamlines multiple people operations functions across your business. Rippling’s payroll solution automatically calculates withholdings and deductions, completes mandatory tax forms, and manages quarterly and annual tax payments.

As we’ve learned, employers sometimes garnish employees' paychecks to cover specific private obligations, including child support payments, student loans, credit card debt, and unpaid taxes. However, misprocessing garnishments can happen if employers fail to manage these deductions properly. Wage garnishment errors can be caused by data entry mistakes, inefficient payroll systems, miscommunication, or employers not knowing the federal and state rules for each garnishment type. Incorrectly processing garnishments can result in fines, legal action, extra administrative work, and other penalties, including financial costs to fix the errors. 

Rippling supports all garnishment types and can even pay them out on your behalf. Rippling’s powerful automations with custom workflows and event-based triggers remove the administrative burden and busy work of payroll. Comprehensive reporting tools ensure that decision-makers access the information they need in real time. Automatic alerts and updates keep your business ahead of the curve for compliance. 

Unlike other systems, Rippling is built on top of a single source of truth for employee data, which means your employee data isn’t tied to one specific app—it’s the same across payroll, time and attendance, onboarding, performance management, and any other apps you use within our unified platform.

Payroll wage garnishment rules FAQs

What is the most that can be garnished from a paycheck?

Federal law limits wage garnishments under the Consumer Credit Protection Act. The maximum amount depends on the nature of the debt:

• Ordinary (consumer) debts: Up to 25% of disposable earnings or the amount exceeding 30 times the federal minimum wage ($7.25), whichever is lower.

• Child support and alimony: Up to 60% of disposable earnings, depending on support obligations. An additional 5% may be added for support payments in more than 12 weeks of arrears.
• Federal student loans: The Department of Education can garnish up to 15% of disposable income for defaulted student loans.
• Unpaid taxes and levies: IRS garnishments are based on tax liabilities, income, dependents, and filing status. 
• Court-ordered fines: Under the CCPA, the maximum garnishment is 25% of disposable earnings or the amount exceeding 30 times the federal minimum wage ($7.25), whichever is lower.

How do you handle payroll garnishments?

The key employer responsibilities for handling garnishments are:

Step 1: Review the garnishment order. Check for accuracy and verify compliance requirements.

Step 2: Notify the employee and provide details about the order and garnishment amount.

Step 3: Calculate the amount of the garnishment based on federal and state law.

Step 4: Withhold the correct portion of the employee’s wages and remit payments to the appropriate creditor or agency. 

Step 5: Maintain accurate records to ensure compliance and resolve any possible disputes. 

What wages cannot be garnished?

Federal and state laws protect some earned wages from garnishment. These include:

• Social Security
• Supplemental Security Income (SSI)
• Veterans' benefits
• Federal Railroad payments for retirement, unemployment, and sickness
• Civil Service Retirement (CSR) payments
• Federal Employee Retirement System (FERS) payments
• Unemployment benefits
• Workers’ compensation
• Disability payments
• Retirement benefits
• State-specific exemptions

Employers must check with state and local authorities for any changes or exemptions to the above.

Can employees dispute a wage garnishment?

Yes. Employees can challenge wage garnishment orders in several ways, including filing an objection with the court or agency that issued the order, exploring exemption options, or negotiating directly with the creditor for alternate solutions. If an employee is unsure about an active order, they can check court records, contact their employer, or visit government websites to learn how to look up garnishments and verify details.

This blog is based on information available to Rippling as of February 24, 2025.

Disclaimer: Rippling and its affiliates do not provide tax, accounting, or legal advice. This material has been prepared for informational purposes only, and is not intended to provide or be relied on for tax, accounting, or legal advice. You should consult your own tax, accounting, and legal advisors before engaging in any related activities or transactions.