The Overlooked Payroll Peril of Garnishments

In the myriad of tasks that compose the payroll department’s responsibilities, there lies a hidden yet crucial aspect that often goes unnoticed until it culminates into a significant problem—the accurate deduction and remittance of garnishments. While seemingly straightforward, the failure to properly manage wage garnishments can lead to serious legal and financial consequences for employers.

Understanding Wage Garnishments

Wage garnishment is a legal procedure through which an employer withholds a portion of an employee’s earnings for the payment of a debt under court or government agency order. These can include child support, tax levies, student loans, or other personal debts. Despite its importance, this aspect of payroll is frequently overlooked, mainly due to its complexity and the constant changes in legislation that vary by jurisdiction. However, mishandling garnishments can result in penalties, fines, and can even damage the employer’s reputation.

The Stakes are High

Approximately 7% of U.S. workers have their wages garnished for various debts. This statistic underscores the prevalence of garnishments and the necessity for employers to manage them correctly.  Failing to comply with garnishment orders can lead to severe repercussions. For instance, in 2019, a major corporation was fined over $1 million for failing to properly withhold and remit employee garnishments. Such cases highlight the potential financial and legal pitfalls organizations face when they neglect this essential payroll function.

The Garnishment Compliance Challenge

Garnishment compliance presents several challenges for businesses, including:

• Complex Regulations: Navigating the multitude of state and federal laws governing garnishments can be daunting, requiring expertise and constant vigilance.
• Administrative Burden: Processing garnishments involves meticulous record-keeping and coordination, increasing the administrative load on payroll departments.
• High Risk of Error: The risk of making errors in calculating or remitting garnished amounts is high, given the complexity and variability of the orders.

How APlus Can Help

Our comprehensive payroll management system, through UKG Ready,  provides robust features designed to ensure that garnishments are handled accurately and efficiently:

• Automated Deductions: We can help you automate the deduction process, reducing human error and ensuring that the correct amounts are withheld based on the latest regulations.
• Regulatory Updates: With real-time updates on changes in garnishment laws, we can help keep you compliant without having to constantly monitor legislation.
• Record-Keeping: As long as you either input the forms yourself or let us know about them in a timely way so we can, the system can maintain detailed records of all garnishment orders and transactions, simplifying audit processes and legal compliance.
• Customizable Reports: We can help you generate customized reports to track garnishment activities, providing visibility and control over this complex aspect of payroll.

By leveraging the capabilities of our software and service, you can mitigate the risks associated with garnishment compliance, safeguarding against legal snags and financial penalties, while also maintaining trust and credibility with your employees.

The accurate deduction and remittance of garnishments may not be the most glamorous aspect of payroll, but it is undeniably crucial. In the intricate dance of compliance, a misstep in handling garnishments can lead to dire consequences. Therefore, employers should prioritize this aspect of payroll management to ensure accuracy, compliance, and peace of mind in navigating the garnishment minefield.