Understanding Garnishments and how to manage them using embedded payroll
Garnishments are a critical part of payroll processing, and as an administrator, you'll need to ensure that your business complies with legal requirements. Garnishments occur when a court or government agency requires a portion of an employee's earnings to be withheld to satisfy a legal debt, like child support, alimony, taxes, or other court-ordered obligations.
Here's a breakdown of what garnishments mean for you as an administrator and how it impacts your payroll system and data management.
Types of Garnishments
There are several types of garnishments that may affect your payroll processes:
- Wage Garnishments: This is when a portion of an employee's paycheck is deducted to satisfy a debt. It's commonly used for child support, alimony, tax debts, and other court-ordered judgments.
- Tax Levies: This happens when a government agency, such as the IRS, directs you to withhold a portion of an employee's earnings to settle unpaid taxes.
-
Student Loan Garnishments: If an employee defaults on a student loan, a garnishment order can be issued to recover the debt.
Responsibilities of HR/ Payroll Administrators
As an administrator handling payroll, you have specific responsibilities when it comes to garnishments:
- Compliance with Legal Orders: You must comply with the garnishment order and begin withholding the specified amount from the employee's paycheck. Failure to comply can lead to penalties for the business.
- Accuracy and Consistency: Ensure that the correct amount is deducted from each paycheck, and that these deductions are consistent with the order's instructions.
- Confidentiality: Garnishments are sensitive information. You must handle employee data confidentially and ensure that only authorized personnel have access to garnishment-related information.
- Recordkeeping: Keep accurate records of all garnishments, including copies of court orders, amounts deducted, and dates of garnishment. These records may be needed for audits or legal compliance.
- Communication with Employees: Although employees are typically informed about garnishments before they reach you, it's helpful to have a communication plan to address any questions or concerns employees may have.
How Garnishments Affect Our Embedded Payroll System
For Garnishments, you won't see these in GoCo but you can see them on the preview page just before you submit payroll (because this page generates after connecting with Gusto where the garnishment is stored).
It's best practice to check this page before hitting submit for all payroll deductions and nuances and you can export this report for your records and reference later