Wage garnishment is as serious as it sounds. And it sounds pretty serious.
A last-resort method of collecting debt, wage garnishment occurs when a court order is filed that requires a person’s employer to withhold or garnish their employee’s wages until the debtor’s outstanding debts are paid in full.
If you haven’t had to deal with wage garnishment on behalf of an employee, chances are you will sometime in the near future. While no national statistics are kept regarding wage garnishment, many cities have experienced a sharp increase over the last decade. According to The New York Times, from 2005 to 2010, wage garnishments increased by 121 percent in the Phoenix area, and by 55 percent in Atlanta from 2004 to 2010.
The impact of wage garnishment on your employees extends beyond their paychecks, and into every aspect of their lives. Having their wages garnished is often humiliating for an employee because it means:
· Their financial situation has become so dire that the court system has had to intervene
· The secret of their financial struggles has been made known to their employer
· They are no longer working solely for themselves and their future, but for the institutions to which they are in debt
Wage garnishment is also a demotivating force that can increase financial stress, decrease worker productivity, and ultimately, affect your bottom line. And, because wage garnishments are figured during the payroll process, it’s your responsibility as an employer to calculate the amount of money that will be taken from your employee’s paycheck until the garnishment expires.
While you are legally responsible to follow through with any wage garnishments imposed upon your employees, there are ways you can help your employees through this tough time. By making a financial wellness expert available to provide counsel and offer budgeting solutions, and by providing preventative financial wellness training, you can minimize the negative effects of wage garnishment on your organization and help your employees get out of debt.
Peter Dunn a.k.a. Pete the Planner® is an award-winning financial mind and a former comedian. He’s a USA TODAY columnist, author of ten books, and is the host of the popular radio show and podcast, The Pete the Planner Show. Pete is considered one of the foremost experts on financial wellness in the world, but he’s just as likely to talk your ear off about bass fishing.