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Ward, Hayden
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Payroll Garnishment Basics for Adventure Sport Businesses

Payroll garnishment for outfitters

Payroll garnishment is an uncomfortable topic for employers and employees alike. Not only is it complicated; it often touches on sensitive issues, such as personal debt. At the same time, every employer needs to be familiar with garnishment rules and regulations as it can happen to just about anyone at any time.

With that in mind, let’s walk through the basics of garnishment, how it affects your adventure sports business’ payroll and tips to prepare so that you can avoid common mistakes and feel confident about the decisions you make. 

What Is Payroll Garnishment? 

Normally, an employer sets aside a portion of an employee’s wages for taxes and distributes the remaining amount (the disposable earnings) to the employee. However, in the event of garnishment, you, the employer, are required to set aside an additional portion of an employee’s wages and deliver that amount to a third party, such as the IRS or a creditor. In other words, you use part of your employee’s salary to pay off their debt.

A payroll garnishment is triggered when an employee owes money to a government institution, private organization or individual, such as a former spouse. They may owe child support, alimony or student loans, or they may have tax or credit debt.

If a person neglects to pay a debt to a private organization, such as a creditor, the organization may sue them. If the creditor wins the suit, they will serve that individual’s employer with a court order to garnish their employee’s wages.

However, not all organizations are required to obtain a court order for garnishment. Many government institutions, such as the IRS or the U.S. Department of Education, have the authority to garnish wages without going to court.

How Does Garnishment Affect Your Outfitter’s Business Payroll? 

Although garnishment is triggered by an employee’s debt, it’s the responsibility of their employer to collect (“garnish”) a portion of the employee’s wages and deliver it to the appropriate creditor.

What portion of your employee’s wages are you required to garnish? That depends on the nature of their debt. For example, if the employee is in debt for a student loan, a government agency may garnish up to 15% of their disposable earnings. However, if the employee owes child support, 50% or more may be garnished.

Three Things You Can Do to Get Your Adventure Sports Business Garnishment-Ready

1. Know your responsibilities. As an employer, you are legally required to:

  • Notify your employees of garnishments.
  • Withhold the appropriate portion of your employee’s wages and distribute the garnished money to the creditor.
  • Provide your employees with instructions for protesting the garnishment.

As an employer, it’s critical that you answer garnishment queries promptly and accurately. If an employer fails to comply with wage garnishment, misses key deadlines or incorrectly answers a garnishment query, they may face severe penalties or fees. Further, they could potentially become liable for some or all the employee’s debt. To ensure compliance and avoid penalties,  be sure to partner with a trusted payroll expert.

2. Know your rights. As an employer, you are entitled to advanced notice of the garnishment. In most cases, the creditor must contact you at least 30 days before the garnishment period. This may vary depending on the creditor and other factors. 

The notice you receive should include the amount owed, instructions to obtain a copy of the loan records and information detailing how your employee may enter a voluntary repayment schedule. It should also include instructions for requesting a hearing on the garnishment, which you’re required to pass on to your employee. 

Please note that you do NOT have the right to terminate, discipline or retaliate against an employee due to garnishment. 

3. Work with a trusted advisor to establish policies and procedures for garnishment. By building clear guidelines now, you can bring clarity and efficiency to the process later. Trusted by more than 82,000 clients, CBIZ Human Capital Management can help you navigate the challenges and intricacies of your employees’ life cycles, including payroll garnishment. To get started,  learn more about our payroll solutions  or  connect with a Human Capital Management Consultant.

Protect Your Business with The Best in The Game

Just as you invest in your employees and your business, it is equally as important to protect them. Our team has the knowledge and experience to provide comprehensive insurance and risk solutions designed to safeguard your outfitters and guides business.  Request a free CBIZ Adventure Sport Insurance quote  today.

This blog may contain scenarios that are provided as examples only. In an actual claim situation, coverage is subject to the terms, conditions and exclusions of the policy issued. The information provided is general in nature and may be affected by changes in law or the interpretation of such laws. The reader is advised to contact a professional prior to taking any action based upon this information.

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CBIZ Sattler Adventure Sports Insurance, a division of CBIZ Insurance Services, Inc., is the largest insurer of adventure sports businesses in the United States. As part of an $850 million New York Stock Exchange traded company (CBZ), we developed a policy coverage to meet the needs for those in the recreation and outfitting industries. Our policy is underwritten by an A.M. Best Rated A++ (Superior) company.