Wage Garnishment: What Employers Need to Know

By Nicole Hullihen, former SaaS Chief Operating Officer and Microsoft MVP · Updated October 18, 2026

Most small business owners don't think about wage garnishment until an order shows up in the mail. Suddenly you're responsible for withholding part of an employee's paycheck, sending it to the right place and doing it correctly every payday. Mistakes can create problems with the court or agency that issued the order, and with the employee too.

This guide explains what garnishment is, the federal limits, how to calculate disposable earnings, worked examples, what to do when an order arrives and how to protect the employee's privacy and job.

Note: This is general information, not legal or payroll advice. State garnishment laws vary, and many set lower limits than federal law. Follow the specific instructions on each order and check with your payroll provider or an attorney if you're unsure.

What Is Wage Garnishment?

Wage garnishment is a legal procedure where an employer is required to withhold part of an employee's earnings to pay a debt. The order usually comes from a court or a government agency. Common types:

The Federal Law: Title III of the Consumer Credit Protection Act

Title III of the Consumer Credit Protection Act (CCPA) sets federal limits on how much can be garnished and protects employees from being fired over garnishment. The Department of Labor's Wage and Hour Division has authority to enforce the limits on the amount that may be garnished.

Disposable Earnings

Garnishment limits are based on disposable earnings. The Department of Labor defines disposable earnings as the amount of earnings left after legally required deductions are made. The fact sheet gives examples of legally required deductions, including federal, state and local taxes, Social Security and Medicare. Deductions not required by law, such as voluntary wage assignments, union dues and health and life insurance, aren't subtracted when figuring disposable earnings.

Limits for Ordinary Garnishments

For ordinary garnishments, meaning those not for support, bankruptcy or taxes, the Department of Labor says the weekly amount may not exceed the lesser of:

• 25% of the employee's disposable earnings, or
• the amount by which disposable earnings are greater than 30 times the federal minimum wage. At $7.25 an hour, that's $217.50 a week.

This means employees with very low disposable earnings are protected from ordinary garnishment entirely. When pay periods cover more than one week, the Department of Labor says multiples of the weekly restrictions must be used, and its fact sheet lists the amounts for biweekly, semimonthly and monthly pay.

Worked Examples (Weekly Pay)

These examples use the federal limits for an ordinary garnishment. Your state's limits may be lower.

Child Support and Alimony

Support orders allow higher withholding. According to the Department of Labor, up to 50% of disposable earnings may be garnished for child support or alimony if the worker is supporting another spouse or child, and up to 60% if not. An additional 5% may be garnished for support payments more than 12 weeks in arrears.

Support orders usually come with specific instructions, including the amount to withhold and where to send it. Follow the order and your state's rules, which may set lower limits.

Federal Student Loans, Taxes and Bankruptcy

• Federal non-tax debts, including defaulted federal student loans: the Department of Labor says garnishment may be up to 15% of disposable earnings.
• Federal and state tax debts: the Department of Labor says the CCPA's general limits don't apply to federal or state tax levies. Follow the instructions that come with the levy.
• Bankruptcy court orders: the general limits don't apply to certain bankruptcy court orders. Follow the court's instructions.

State Laws

The Department of Labor says that if a state wage garnishment law differs from the CCPA, the employer must observe the law resulting in the smaller garnishment. Many states have their own limits, exemptions or procedures, so check your state's rules and the instructions on each order.

Job Protection for Garnished Employees

The Department of Labor says the CCPA prohibits an employer from firing an employee whose earnings have been subject to garnishment for any one debt, regardless of the number of levies made or proceedings brought to collect it. State laws may offer more protection, and treating an employee poorly because of a garnishment is never a good practice.

Practical steps to protect employees:

• Keep garnishment orders and related information confidential.
• Share details only with people who need them to process payroll.
• Don't discuss an employee's garnishment with coworkers.
• Base employment decisions on performance and conduct, not on garnishments.

What to Do When a Garnishment Order Arrives

1. Read the order carefully. Note the type, the employee, the amount or percentage, the start date and where to send payments.
2. Check deadlines. Many orders require you to respond or acknowledge within a set time.
3. Notify your payroll provider or update your payroll system.
4. Tell the employee privately that you received the order and when withholding will begin. Give them a copy if the order or state law requires it.
5. Calculate disposable earnings each pay period.
6. Apply the correct limit: the order's amount, federal limits and any lower state limit.
7. Send payments on time to the address or system listed.
8. Keep records of every withholding and payment.
9. Stop or change withholding only when you receive a release or amended order.
10. Notify the issuer if the employee leaves, following the order's instructions.

More Than One Garnishment

Sometimes an employee has more than one order, such as child support and a consumer debt. Priority and limits can get complicated, and the rules depend on the type of order and your state. Follow the instructions on each order, keep careful records and ask your payroll provider or an attorney how to handle the combination.

Common Garnishment Mistakes

• Ignoring the order or missing the response deadline.
• Using gross pay instead of disposable earnings.
• Subtracting deductions not required by law, like health insurance, before calculating limits.
• Ignoring state limits that are lower than federal limits.
• Withholding too much or too little.
• Sending payments late or to the wrong place.
• Sharing garnishment details with coworkers.
• Firing an employee over a single garnishment.
• Continuing to withhold after a release.

Wage Garnishment Checklist

Where Garnishment Fits in Payroll

Garnishment withholding happens after taxes are calculated. A simple order of operations for each paycheck:

1. Calculate gross pay from hours worked, overtime, commissions and other earnings.
2. Subtract legally required deductions such as tax withholding, Social Security and Medicare to find disposable earnings.
3. Apply the garnishment limit to disposable earnings, using the order and any lower state limit.
4. Withhold the garnishment amount.
5. Apply other deductions such as benefits, following your payroll provider's rules.
6. Pay the employee the remaining net pay.

Because the limits depend on disposable earnings, a week with more hours or overtime can change the amount that can be withheld. That's why accurate time records matter.

Example: Overtime Changes the Garnishment

Talking With Employees About Garnishment

Employees are often embarrassed or stressed when a garnishment arrives. A calm, private conversation helps:

• Explain that the business is legally required to follow the order.
• Share when withholding starts and how much, based on the order.
• Give them the contact information on the order for questions about the debt.
• Reassure them that the garnishment is confidential.
• Avoid giving legal or financial advice about the debt itself.

Garnishment vs. Voluntary Wage Assignments

A garnishment is a legal order. A voluntary wage assignment is an arrangement the employee chooses, such as agreeing to have part of each paycheck sent to a creditor. The Department of Labor lists voluntary wage assignments among deductions not required by law. Voluntary deductions should follow your state's rules, which often require written authorization. See is it legal to dock an employee's pay for a mistake.

When an Employee Leaves

If an employee with an active garnishment quits or is terminated, check the order for instructions. Many orders ask the employer to notify the issuer within a set time and provide the employee's last known address. Apply the garnishment to the final paycheck as the order requires, and pay the final wages on time under your state's rules. See final paycheck laws by state.

Garnishment Recordkeeping

Keep a clear file for each garnishment so you can answer questions from the employee, the court or the agency:

Keep these records confidential and separate from general personnel files, and follow your state's rules on how long to keep payroll records.

Getting Help

Garnishments can be confusing, especially for a first-time employer. Your payroll provider can usually set up the withholding and payments. For questions about the federal limits, the Department of Labor's Wage and Hour Division administers the wage garnishment provisions of the CCPA. For questions about a specific order, contact the court or agency that issued it.

Quick Reference

Accurate Hours Make Garnishments Easier With Updoot

Garnishment calculations start with accurate gross pay. Updoot's employee time clock captures every hour, and the payroll report gives your payroll provider clean hours, overtime and pay data each period, so withholding is calculated on the right numbers. Updoot creates payroll reports; your payroll provider or accountant processes the garnishment.

Sources

• U.S. DOL: Fact Sheet #30, The Federal Wage Garnishment Law, Consumer Credit Protection Act's Title III

Frequently Asked Questions