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3 Things Employers Should Know About Wage Garnishments

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Millions of Americans’ wages are garnished every year, meaning most employers have processed at least one wage garnishment.

Creditors and financial institutions now use wage garnishments to collect on everything from medical bills to consumer debt. Debt collectors, creditors and debt buyers file numerous consumer credit lawsuits annually in almost every state. Just as the number of wage garnishments has the potential to increase, so does the time it takes an employer to fully execute one. Some interest-accruing orders could leave employers responsible for withholding wages for years.

Whether you are processing your first or 50th wage garnishment, keeping these things in mind can help you consistently mitigate risk and reduce your company’s liability:

  1. You must respond to a writ of garnishment, even if issued to you in error.

Sometimes, courts accidentally send a writ of garnishment either to the debtor’s previous employer or the wrong employer altogether. If you receive a garnishment order under either of these circumstances, you still must answer the garnishment. Specific procedures exist to help employers navigate this situation.

Remember, when you receive a writ of garnishment, the issuing court is ordering you to seize property in the form of wages. Failing to properly respond could result in noncompliance with a court order and leave you on the hook for the entire amount of the debt.

  1. Laws for calculating garnishments vary depending on the type of order and/or the state in which you are located.

States’ wage garnishment laws differ from one another and from federal law. Understanding which set to follow will ensure you’re accurately calculating garnishment amounts. Generally, you must follow your state’s wage garnishment laws, even if the order originated out-of-state.

Federal law provides that no more than 25 percent of an employee’s disposable earnings can be withheld. However, some states allow garnishment of no more than 10 percent of an employee’s wages. Others have rules against collecting amounts that drop an employee’s earning levels below the poverty line. North Carolina, Pennsylvania, South Carolina and Texas have banned garnishments as a means of collecting on consumer debt.

The U.S. Department of Labor advises employers faced with conflicting withholding requirements to follow whichever law results in the smaller garnishment amount.

Exceptions exist for garnishments that result from bankruptcy, nonpayment of state or federal taxes or a child support or alimony order. Withholding percentages for these garnishments are different and you must determine which law takes precedence. For example, employers executing withholding orders for child support or alimony must abide by garnishment laws of the state that issued the order and the state where the employee works, depending on which part of the process they’re executing.

Understanding and following the variances in state and federal laws is crucial to remaining compliant with wage garnishment orders you receive.

  1. Some garnishments take priority over others.

should be given priority over those in arrears.

Other types of garnishments require employers to process existing orders before newer ones. Failure to process garnishments by legally mandated order can result in noncompliance.

Carrying out wage garnishments can be complicated. The administrative burden of executing an order can be challenging for employers, considering the margin for error is practically nonexistent. Employers who do not pay attention to the details of each garnishment order could face penalties for noncompliance.

For some companies, outsourcing wage garnishments to a knowledgeable HR and payroll provider is one option that can help them remain compliant, mitigate risk and reduce liability for every wage garnishment they process.


Matthew Paque

by Matthew Paque


Author Bio: Matthew A. Paque is Paycom’s Director of Legal and Compliance. In this role, he is responsible for Paycom’s legal affairs including compliance and risk management. He has served in a variety of leadership and legal positions in both the private sector and in government. Before joining Paycom, Paque was an attorney at the law firm of McAfee & Taft and previously was Assistant General Counsel at Tronox a global mining and chemical company. He holds a J.D. from the University of Oklahoma and a B.A. from Oklahoma City University. Paque is also an adjunct professor at Oklahoma City University’s Meinders School of Business.

Affordable Care Act (ACA)

Trump Announces 2 Changes to ACA

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Update 10/18/2017 – On October 17, Senators Lamar Alexander and Patty Murray announced a tentative bipartisan deal to help stabilize the ACA Marketplaces and potentially fund Cost Sharing Reduction payments for two years. The bill must pass both the Senate and the House before it becomes effective, and would also require President Trump’s signature.

On Oct. 12, President Donald Trump ordered comprehensive changes to the nation’s health insurance system while also, in a separate move, ended health care subsidies for low-income Americans. The White House billed the decisions as relief to those suffering under the Affordable Care Act (ACA), while the opposition condemned these changes as actions aimed at undercutting the ACA.

Expansion of association health plans and short-term insurance

The executive order signed by Trump directs federal agencies to make it easier to set up “association health plans,” which are groups of small businesses that pool together to buy insurance. The order also seeks to broaden the definition of short-term insurance from three months to almost a year in duration.

By expanding both these types of plans, the administration expects insurance to be less costly than the plans sold on the state-based insurance exchanges, which provide more extensive coverage options. One concern, however, is healthy customers will jump out of the individual markets for cheaper plans, leaving sicker customers on the underwritten exchanges.

Health care subsidies to end

Trump also will end health care subsidy payments to insurance companies that used them to pay out-of-pocket costs for low-income people receiving coverage through the exchanges. The future of these payments have been in doubt for months – dating back to the Obama administration – because of a lawsuit filed by House Republicans. The lawsuit alleged the Obama administration was paying these subsidies illegally because Congress had never authorized the cost-sharing arrangement.

Until now, the Trump administration had continued the payments on a monthly basis. A group of state attorneys general has indicated it will sue to block the administration from ending these payments, which it claims will cause the individual markets to unravel.

ACA Awaits Repeal or Repair

What this means for employers

Neither of these changes is aimed primarily at employers subject to the ACA employer mandate, so clients using Paycom’s ACA services likely won’t see a direct impact to their obligations under the law. However, the tweaks indirectly could result in higher costs to employer-sponsored plans.

Disclaimer: This blog includes general information about legal issues and developments in the law. Such materials are for informational purposes only and may not reflect the most current legal developments. These informational materials are not intended, and must not be taken, as legal advice on any particular set of facts or circumstances. You need to contact a lawyer licensed in your jurisdiction for advice on specific legal problems.

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Posted in ACA, Blog, Compliance, Employment Law, Featured

Jason Hines

by Jason Hines


Author Bio: Jason Hines is a Paycom compliance attorney. With more than five years’ experience in the legal field, he monitors developments in human resource laws, rules and regulations to ensure any changes are promptly updated in Paycom’s system for our clients. Previously, he was an attorney at the Oklahoma City law firm Elias, Books, Brown & Nelson. Hines earned a bachelor’s degree from the University of Central Oklahoma and his juris doctor degree from the Oklahoma City University School of Law, where he graduated cum laude. A fan of the Oklahoma City Thunder, Hines also enjoys exploring the great outdoors with his wife and daughter.

EEO-1 Pay Data

EEO-1 Pay Data Requirements on Indefinite Hold

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The EEO-1 report is changing once again. Recently, the new pay data and hours worked requirements announced last year were suspended indefinitely by the Office of Information Regulatory Affairs. While employers will report Equal Employment Opportunity (EEO) information in a familiar format, they need to be aware of key date changes.

3 important changes

The biggest change to the report is the suspension of the requirement to report pay data and hours worked. For 2017, employers will report in the prior 2016 format, which only collects data on race, ethnicity and gender by occupational category. When the new EEO-1 requirements were announced by the Obama administration last year, the 2017 reporting deadline was moved from Sept. 30, 2017, to March 31, 2018.

According to an Equal Employment Opportunity Commission (EEOC) statement, “the previously approved EEO-1 form which collects data on race, ethnicity and gender by occupational category will remain in effect. Employers should plan to comply with the earlier approved EEO-1 (Component 1) by the previously set filing date of March 2018.” Additionally, the previously approved “workforce snapshot” period of Oct. 1 through Dec. 31 will remain in effect. Therefore, employers must submit reports based on a payroll period within that time frame.

Summary of the changes:

  • The deadline to file EEO-1 reports for 2017 is March 31, 2018;
  • Reports must be based on a payroll period in October, November or December of 2017; and,
  • Employers may use the same EEO-1 form used in 2016.

The EEOC has not yet fully updated its website to reflect this new information, but the home page provides some explanation.

Pay data requirement gone?

The pay data and hours worked requirements simply have been suspended. Until the Office of Management and Budget (OMB) completes its review of the rule, their future is unclear. The OMB is concerned that some aspects of the revised rule “lack practical utility, are unnecessarily burdensome, and do not adequately address privacy and confidentiality issues.” The acting chair of the EEOC, Victoria Lipnic, has been vocal with her opposition to the pay data requirement, which she voted against when it was initially proposed.

Although the EEO-1 report appears to be ditching the pay data requirement, state governments may step in to fill the void. Under a proposal in California, employers in the state with more than 500 employees would be required to submit information to the Secretary of State on gender wage differentials. Although this measure has not been signed by the governor, employers should monitor this legislation, which would go into effect in 2019.

Disclaimer: This blog includes general information about legal issues and developments in the law. Such materials are for informational purposes only and may not reflect the most current legal developments. These informational materials are not intended, and must not be taken, as legal advice on any particular set of facts or circumstances. You need to contact a lawyer licensed in your jurisdiction for advice on specific legal problems.

Tags: , ,
Posted in Blog, Compliance, Employment Law, Featured

Jason Hines

by Jason Hines


Author Bio: Jason Hines is a Paycom compliance attorney. With more than five years’ experience in the legal field, he monitors developments in human resource laws, rules and regulations to ensure any changes are promptly updated in Paycom’s system for our clients. Previously, he was an attorney at the Oklahoma City law firm Elias, Books, Brown & Nelson. Hines earned a bachelor’s degree from the University of Central Oklahoma and his juris doctor degree from the Oklahoma City University School of Law, where he graduated cum laude. A fan of the Oklahoma City Thunder, Hines also enjoys exploring the great outdoors with his wife and daughter.

Parental Leave

Leave Only a Mother Could Love: The Care of Pregnancy and Parental Leave

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Explaining the terms associated with leave taken for pregnancy or childbirth-related purposes

Pregnancy and parental leave are among the most common types of leave that employers must manage today. At the federal level, they are governed mainly by the Family and Medical Leave Act (FMLA); however, leave may be awarded under the Americans with Disabilities Act Amendments Act (ADAAA) or Pregnancy Discrimination Act (PDA) as well.

Need a refresher on FMLA, ADAA or PDA? Check out “Addressing Employer Confusion With Pregnancy Related Laws: What to Expect When Your Employees Are Expecting.

When it comes to these types of leave, similar-sounding terms can get thrown around, such as “pregnancy leave,” “parental leave,” “maternity leave” and “childbirth-related medical leave.” They do not necessarily have different meanings under the various pieces of legislation. In fact, the laws do not explicitly mention these terms, but instead provide circumstances under which leave may be entitled.

What’s the difference?

“Parental leave” or “family medical leave” are synonymous and fairly broad, and can be associated with leave taken for childbirth, for the care of a newborn or for other purposes unrelated to pregnancy, such as adoption placement. Both terms are gender-neutral, so they may be taken by both mothers and fathers.

Pregnancy leave can be a form of parental leave, but also encompasses leave taken only by a mother for a disability or serious health condition related to pregnancy or childbirth.

In general, leave provided under FMLA can be termed overall as “family medical leave” or “parental leave,” but a slight distinction can be made in certain circumstances. Although vague, the distinction under FMLA between parental and pregnancy leave comes into play when a pregnant employee and her spouse both work for the same employer. In such cases, the FMLA limits the combined amount of leave they may take for some qualifying reasons, and the spouse will be limited to a combined amount of leave taken for the birth and bonding.

However, the time taken by a mother for her own serious health condition related to pregnancy or for prenatal care will not be included in this combined limit. Therefore, the distinction between leave used for pregnancy-related medical conditions and parental leave used to bond with a newborn can have a significant impact on the overall amount allowed.

Whats the difference between the Pregnancy Discrimination Act and the Americans with Disabilities Act Amendment Act? 

“Pregnancy disability leave” is a term that has gained recent popularity. As the name suggests, this leave correlates to a pregnancy or childbirth-related disability that prevents the employee from performing essential duties of her job.

Employers may have their own policies in place to provide for types of leave. In these instances, terms like “maternity leave” or “paternity leave” may emerge. In general, these types are encompassed under the terms “parental leave” or “family medical leave,” but employers may choose to define them differently.

Ultimately, many terms can be used to categorize leave taken by employees for pregnancy or childbirth. The terms themselves generally do not have significantly differing meanings, but small distinctions may exist when it comes down to the specific reasons for taking such leave.

For more about the EEOC’s current focus on pregnancy-related limitations and how to address potential confusion with pregnancy related laws, be sure to read EEOC Cracks Down on Pregnancy Discrimination and Addressing Employer Confusion With Pregnancy Related Laws: What to Expect When Your Employees Are Expecting.

Disclaimer: This blog includes general information about legal issues and developments in the law. Such materials are for informational purposes only and may not reflect the most current legal developments. These informational materials are not intended, and must not be taken, as legal advice on any particular set of facts or circumstances. You need to contact a lawyer licensed in your jurisdiction for advice on specific legal problems.

Tags: , , , , , , , ,
Posted in Blog, Compliance, Employment Law, Featured

Kristin Fisher

by Kristin Fisher


Author Bio: As a compliance attorney for Paycom, Kristin Fisher monitors legal and regulatory changes at the state and federal level, with a focus on labor and employment laws, to ensure the Paycom system is updated accordingly. Previously, she served as an attorney at the Oklahoma City law firm Derryberry & Naifeh LLP. Fisher earned a bachelor’s degree and MBA from the University of Central Missouri, and her Juris Doctor from the Oklahoma City University School of Law. Outside of work, she enjoys cooking, hiking, going to the movies and spending time with her fiancé.

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