HR Support on Involuntary Payroll Deductions

Editor's Note: Involuntary withholding orders require immediate action.

Rena PirsosOverview: Employers are often ordered by either a court or a government agency to make deductions from employees' wages to satisfy a debt. Employers must implement payroll withholding pursuant to these orders in addition to amounts required by law, such as income and employment taxes. These pay deductions can collectively be referred to as involuntary simply because employees do not request that they be made. Involuntary deductions include those for:

  • Federal tax levies;
  • Child support withholding orders;
  • Bankruptcy orders;
  • Creditor garnishments;
  • Student loan garnishments; and
  • Federal agency loan garnishments.

Employers need to be well versed in how to handle these types of orders because they often must be implemented immediately upon receipt and because employers are subject to serious penalties if they do not comply with them. An employer that receives any type of withholding order should be prepared to answer all, or at least some, of the following questions:

  • Follow federal or state law?
  • Which state's law to follow if more than one state is involved?
  • Which order has priority if there is more than one?
  • How much should be withheld?
  • When to start and stop withholding?
  • Where, when and how to send amounts withheld (e.g., electronically)?

Note that the amount that may be withheld for child support orders, creditor garnishments, student loan and federal agency debt garnishments is limited by the Consumer Credit Protection Act (CCPA). Federal tax levies and bankruptcy orders are not subject to the CCPA limits.

In addition, the basic rule of priority among the different types of involuntary withholding orders is that federal tax levies must be satisfied before any other type of withholding order, except for child support withholding orders dated before the date of the levy and certain bankruptcy orders. Additional rules of priority apply within each type of order if an employee is subject to more than one.

Author: Rena Pirsos, JD, Legal Editor

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