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An employee with debts also affects you as an employer: you face wage garnishment, extra administration, and potential loss of productivity. You are obliged to cooperate with wage garnishment, but you can prevent a great deal of misery by discussing problems early and helping the employee.
Employee debt is common
Many employers have to deal with employees in debt. This costs money and attention: think of wage garnishment, administration, stress for the employee, and sometimes reduced productivity. It pays to handle this well, both for the employee and for your organization.
Your obligations regarding wage garnishment
If a creditor garnishes wages (a third-party attachment) via a bailiff, you are obliged to cooperate: you must withhold a portion of the wages and remit it to the bailiff. In doing so, you must respect the protected amount—the minimum amount the employee is entitled to to live on. If you do not cooperate correctly, you may become liable for the garnished amount yourself.
Make problems open for discussion
It is wise to discuss debts early on, even before wage garnishment is imposed. An open conversation and a referral to assistance (such as debt counseling) can prevent the situation from worsening. An employee who gets their finances in order performs better and is absent less often.
What else can you do?
Consider offering assistance or an advance payment arrangement within the rules, referring people to budget coaching, and handling the situation carefully and confidentially (privacy). Record agreements regarding this in your policy so that you act consistently and correctly.
Frequently Asked Questions
Do I have to cooperate with wage garnishment?
Yes. In the case of wage garnishment, you withhold a portion of the wages and remit it, respecting the protected amount. If you do not cooperate correctly, you may be held personally liable.
What is the protected amount?
The minimum amount the employee is entitled to to live on. That portion may not be withheld.
What can I do besides wage garnishment?
Discuss debt early, refer to assistance, and support the employee, with respect for their privacy.
Draft a policy on debt and wage garnishment?
Our legal experts document this in your employee handbook and advise on wage garnishment. View our employment lawteam or schedule a free consultation.
