Overview: Employers must know how to properly make many different types of deductions from employees' pay.
For example, employers are often ordered by either a court or a government agency to make deductions from employees' pay to satisfy a debt, such as child support, a creditor garnishment, a tax levy, a bankruptcy or a student loan. Upon receiving such an order, an employer must act quickly to comply with all its terms, under both federal and state law, to avoid serious penalties.
Employers are also required to comply with employees' requests to have amounts deducted from their pay for things like charitable contributions, wage assignments, union and credit union dues and US savings bonds. These types of deductions are primarily governed by state laws that specify the types of deductions that are permitted and prohibited, as well as the circumstances under which they may be made. Therefore, employers need to be familiar with these commonly requested deductions and the various federal and state laws and rules that apply to them.
Author: Rena Pirsos, JD, Legal Editor
Updated to reflect increased creditor garnishment withholding limits, effective January 1, 2020.
Updated to reflect a change in the computation of tax levy withholding due to the new federal Form W-4, effective January 1, 2020.
Updated to reflect the requirement to remit child support payments electronically, effective September 17, 2019.
Updated to include garnishment withholding limits on consumer debts, effective July 28, 2019.
Updated to include a creditor garnishment exemption for certain disposable earnings, effective July 1, 2019.
Updated to reflect amended child support withholding noncompliance penalties, effective July 1, 2019.
An explanation of the issues involved in complying with different types of pay deductions.