A legal order requiring an employer to withhold a portion of an employee's wages and remit to a creditor or government agency.
Wage garnishment is a legal order requiring an employer to withhold a specified amount from an employee's paycheck and send it directly to a creditor or government agency. The most common types: child support orders (highest priority), federal/state tax levies, bankruptcy orders, student loan defaults, and consumer credit judgments.
Employers must comply with garnishment orders — failure to do so can result in the employer becoming liable for the underlying debt. The Consumer Credit Protection Act sets federal limits on how much of an employee's wages can be garnished (typically 25% of disposable income for consumer debt; higher for child support).
PEOs handle garnishment processing automatically — the orders go to the PEO as employer of record, and the PEO's payroll system applies withholding and remittance.
A legal order requiring an employer to withhold a portion of an employee's wages and remit to a creditor or government agency.
Wage garnishment is a legal order requiring an employer to withhold a specified amount from an employee's paycheck and send it directly to a creditor or government agency.
Most PEO buying decisions touch several related concepts at once. Wage garnishment typically comes up alongside the other terms in this category. Closely related terms include Payroll tax, Form W-2 (Wage and Tax Statement).
This is one entry from our PEO glossary covering payroll, benefits, workers comp, HR compliance, and PEO mechanics. Browse all terms.
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