• Stamp the Date and Time of Receipt: Record the exact date and time the garnishment order was received by mail, electronic portal (such as state e-IWO systems), or personal service. Receipt timestamps determine priority when multiple orders arrive.
• Verify Order Authenticity and Employee Identity: Confirm that the notice names your legal business entity, matches an active employee’s name and Social Security Number, and comes from an authorized court, state child support agency, IRS office, or state tax authority.
• Notify the Employee Promptly: Provide a copy of the garnishment order and any legally required employee disclosure forms to the employee immediately. Remember that federal law strictly prohibits firing an employee because their wages are garnished for a single debt.
• Complete and Return Employer Answer Forms: Many creditor garnishments and child support orders require the employer to file a formal written response confirming employment status and pay frequency within a specified window.

• Compute Disposable Earnings Accurately: Subtract only legally mandated deductions from gross pay: federal income tax, Social Security, Medicare, state and local income taxes, and mandatory state disability/unemployment deductions. Do not subtract voluntary deductions such as 401(k) contributions, health insurance premiums, or charitable donations when calculating CCPA disposable earnings.
• Apply Federal CCPA Withholding Caps:
  • Standard Creditor Garnishments: Limited to the lesser of 25% of disposable earnings OR the amount by which weekly disposable earnings exceed 30 times the federal minimum wage ($7.25 × 30 = $217.50 per week). Check state laws, as many states set even lower caps (such as 10% to 15% of gross or disposable pay).
  • Child Support and Alimony Orders: Under the CCPA, up to 50% of disposable earnings may be withheld if the employee supports another spouse or dependent child, or up to 60% if they do not (increasing by an additional 5% to 55% or 65% if arrears exceed 12 weeks).
  • IRS Tax Levies (Form 668-W): Unlike standard garnishments, IRS tax levies calculate exempt take-home pay using IRS Publication 1494 tables based on the employee’s filing status and claimed dependents—remitting all remaining disposable income to the IRS.

• Apply Legal Priority Rules for Multiple Garnishments: When an employee has multiple orders, follow federal and state priority hierarchies:
  1. Child support and spousal support Income Withholding Orders (IWOs) generally take top priority (unless an IRS tax levy was served prior to the support order).
  2. IRS tax levies and Chapter 13 bankruptcy orders.
  3. Federal administrative wage garnishments (such as defaulted federal student loans, capped at 15% of disposable income).
  4. State tax levies and ordinary commercial creditor garnishments (processed on a first-come, first-served basis).
• Deduct Permissible Administrative Fees (If Allowed): Check whether state law allows the employer to deduct a small nominal processing fee (typically $1 to $5 per pay period) without exceeding CCPA withholding caps.
• Remit Garnished Funds on Time: Send withheld payments electronically or by check—clearly labeled with the employee’s name, SSN, and case/docket number—to the designated State Disbursement Unit (SDU), court clerk, or agency on the exact date wages are paid.
• Track Cumulative Balances and Release Orders: Monitor total amounts withheld against creditor judgment caps and never stop a garnishment until you receive an official court or agency release notice—or until the employee separates from the company, at which point you must notify the issuing agency promptly.

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