Excercise Caution When Garnishing Wages

by Susan Martin

Sometimes employees’ financial stress spills into the workplace in the form of wage assignments (garnishments) from debtors – the legal recovery of debt through pay deductions. According to a 2014 survey of 170 metro St. Louis businesses conducted by AAIM Employers’ Association, the vast majority of survey respondents (78%) indicate that between 1 and 10% of their employees currently have debts being paid through seizure of their pay.  

The Survey Says

 A 2014 national study by ADP Research Institute shows that across the U.S., child support accounts for 47% of all types of wage garnishments, followed by tax levies, bankruptcies, and other debts. The study also reveals that if your company is a manufacturer based in the Midwest, your midlevel, midcareer workers are most at risk for garnished wages.  

Issues to Consider

Both federal and state laws regulate garnishments, which include obligations to take prescribed steps for handling and calculating the garnishments. It is generally unlawful to fire an employee because of a garnishment based on a child support order. Similarly, many states (including Missouri and Illinois) prohibit discharging an employee because of repeated garnishments for any one debt.  

Both Missouri and Illinois allow the employer to collect a nominal fee to cover its administrative costs associated with garnishments. However, according to the AAIM survey, only 12% of the surveyed employers actually charge a processing fee.

For more information about Missouri and Illinois garnishment laws, check http://www.moga.mo.gov/statutes/C525.HTM
usan Martin (susan.martin@aaimea.org) is a research and solutions specialist for AAIM Employers’ Association, which helps Missouri and Illinois companies manage their people and processes.