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Involuntary and Voluntary Pay Deductions: South Carolina

Involuntary and Voluntary Pay Deductions requirements for other states

Federal law and guidance on this subject should be reviewed together with this section.

Author: Vicki M. Lambert, The Payroll Advisor

Summary

  • An employer that receives an income withholding order for child support against an employee's wages must begin withholding no later than the pay period that occurs immediately following the pay period in which the order was received. The employer must remit the amounts withheld within seven working days from the date the child support was withheld. The amount that may be withheld is limited by state law. See Child Support Withholding.
  • In South Carolina, earnings for personal services may not be garnished by creditors to repay a debt. See Creditor Garnishment Withholding.
  • If an employee owes unpaid state taxes, the Department of Revenue is authorized to issue to the employer a notice to withhold certain amounts from the employee's wages to pay the unpaid taxes, up to a certain limit. See Tax Levies.
  • Employees may authorize voluntary wage assignments if the authorization is revocable. See Voluntary Wage Assignments.

Child Support Withholding

When and How Much to Withhold

An employer that receives an income withholding order for child support against an employee's wages must begin withholding no later than the pay period that occurs immediately following the pay period in which the order was received. The employer must remit the amounts withheld within seven working days from the date the child support was withheld.

South Carolina employers are permitted to deduct up to 50% of the employee's disposable income for child support, plus an employer administrative fee of up to $3 in addition to the amount withheld for support.

Multiple Orders

If an employee is subject to multiple child support withholding orders but has insufficient income for the employer to comply with all the orders in full, the employer must allocate the withholdings. Allocation for multiple orders must never result in the failure to comply with one of the orders completely. The employer must also notify the entities that issued the orders in writing of the reason it failed to fully withhold for each order. An employer must withhold for current support obligations before withholding for arrearages.

Income and Disposable Earnings

South Carolina law defines income for child support purposes as wages, salaries, commissions, vacation pay and bonuses. It defines disposable earnings as the income remaining after legally required deductions are made, which include but are not limited to the following types of deductions:

  • Federal, state, and local taxes;
  • Social Security, Medicare and other retirement deductions; and
  • Disability contributions.

+S.C. Code Ann. § 63-17-1410.

Combined Payments Allowed

An employer may combine all amounts withheld for child support for multiple employees into one check, if the amount is being sent to the same court or registry. The employer must include a list of the employees for whom the support was withheld and exactly how much was withheld for each employee.

State Disbursement Unit

The South Carolina State Disbursement Unit (SDU) collects and distributes child support payments for cases managed by the state Department of Social Services and all private support cases enforced by the Clerks of Court. All payments must be sent directly to the SDU. Payments must be made by electronic funds transfer using either:

  • ExpertPay - best for small to medium-sized employers who process payroll in-house; or
  • Employer-EFT - best for medium to large-sized businesses that use a third-party payroll processor or have robust accounting software. To use this option, an employer must send an email to SCSDU-Employer-EFT@conduent.com.

Interstate Income Withholding Orders

An employer that receives a child support withholding order from another state must provide the employee with a copy of the order immediately.

The employer must treat an out-of-state income withholding order as if it had been issued in South Carolina and withhold and distribute the funds as directed by the withholding order regarding:

  • The duration and amount of periodic payments of current child support;
  • The person designated to receive the payments;
  • The address to which the payments should be forwarded;
  • Medical support;
  • The amount of any periodic payments, fees and costs for the support enforcement agency, the issuing court and attorney fees; and
  • The amount of arrears and interest on the arrears.

The employer must follow the law of the employee's work state regarding:

  • The employer's fee for processing the income withholding order;
  • The maximum amount permitted to be withheld from the employee's disposable earnings;
  • The times within which the employer must implement withholding and forward the amount withheld to the payee; and
  • The priority rules for honoring multiple income withholding orders against the same employee.

+S.C. Code Ann. § 63-17-3520, + S.C. Code Ann. § 63-17-3530.

Terminated Employees

If the employment of an employee subject to child support withholding terminates, the employer must notify the issuer of the order within 20 days after the termination. A copy of the order to withhold should be used as the notice and should include the following information:

  • Termination date;
  • Final paycheck date;
  • Employee's last known address; and
  • Employee's new employer, if known.

Penalties

An employer that willfully fails to withhold for child support as required by an order may be required to pay the full amount it failed to withhold.

Creditor Garnishment Withholding

In South Carolina, earnings for personal services performed by a debtor (e.g., the earnings of an employee who is in debt) may not be garnished by creditors to repay a debt arising from a consumer credit sale, a consumer lease, a consumer loan or a consumer rental-purchase agreement, regardless of where made. +S.C. Code Ann. § 37-5-104.

Tax Levies

If an employee owes unpaid state taxes, the South Carolina Department of Revenue (DOR) is authorized to issue to the employer a notice to withhold certain amounts from the employee's wages to pay the unpaid taxes. Withholding is limited to no more than 25% of the employee's gross earnings for each pay period until the full amount is paid to the DOR.

If the employee's employment terminates, the employer must withhold for the tax levy the full amount of compensation due to the employee, without exceeding the amount in the notice. The employer must remit the amount to the DOR and inform it of the termination.

+S.C. Code Ann. § 12-54-130.

Voluntary Wage Assignments

A consumer credit sale, a consumer lease, a consumer loan, or a consumer rental-purchase agreement, regardless of where made, may not include a wage assignment. Employees are permitted to authorize payroll deductions as a voluntary wage assignment only if the employee may revoke the authorization. +S.C. Code Ann. § 37-2-410, +S.C. Code Ann. § 37-2-710, +S.C. Code Ann. § 37-3-403.

Future Developments

There are no developments to report at this time. Continue to check XpertHR regularly for the latest information on this and other topics