What Are Garnishments?
Garnishments require employers to deduct a portion of wages and send the payment directly to the agency or creditor listed in the order.
Common garnishment types include:
- Child support orders
- Federal or State Tax Levies
- Student loan repayment orders
- Creditor garnishments
An employer’s responsibility ends when:
- The debt has been fully repaid, or
- The employee is no longer employed
Employers cannot terminate an employee just because they are subject to garnishment.
How Arcoro Support Garnishments
Arcoro processes garnishments on behalf of employers once the required order details are provided. This ensures:
- Correct deductions are taken from each paycheck
- Compliance with legal limits on how much can be withheld
- Proper handling when employees have multiple garnishments
For child support orders, if multiple are active at the same time, Arcoro automatically adjusts deductions so they remain within federal limits and follow government guidelines.
How Garnishments Are Calculated
Disposable Earnings
Garnishments are based on disposable earnings, which is an employee’s pay after legally required deductions, such as:
- Federal, state, and local income taxes
- Social Security and Medicare (FICA)
- State unemployment or disability taxes
Voluntary deductions like 401(k) contributions, health insurance, or union dues are not subtracted when calculating disposable earnings.
Federal Garnishment Limits
Federal law (the Consumer Credit Protection Act) limits how much can be withheld:
- Up to 25% of disposable earnings, or
- The amount above 30 × the federal minimum wage (currently $7.25/hour)
Child Support Limits
Child support orders have their own federal limits, based on family status and arrears:
| Employee’s Family Status | Not in Arrears | 12+ Weeks in Arrears |
|---|---|---|
| Supports another spouse/child | 50% of earnings | 55% of earnings |
| Does not support others | 60% of earnings | 65% of earnings |
Arcoro applies these limits automatically.
Failed or Delayed Payments
If a child support payment fails (for example, due to missing or incorrect case information), Arcoro will:
- Notify the employer or partner, and request updated information
- Work with the agency to resolve the issue
Delays in resolving payment issues can lead to legal consequences for the employee, so prompt action is essential.