Construction Payroll – A Complete Guide to Wage Garnishment Obligations in Construction

Running payroll for a large construction company means you will probably come across wage garnishment orders more than once. Wage garnishment for construction can be complex or even tedious, but it doesn’t have to be. We’ll break down some of the terminology around wage garnishment, explain how garnishing orders work, how much can be garnished from wages, and show you how to ensure that your construction company will stay compliant.  

What is Wage Garnishment?  

Wage garnishment is a legal procedure when a person’s earnings are required by a court order to be withheld by an employer for the payment of a debt such as child support, outstanding taxes, or personal debt such as student loans. (link to definition) https://www.dol.gov/general/topic/wages/garnishments  

Wage garnishments are typically defined in one of three ways:  

• As a percent of total of gross earnings. 
• As a fixed quantity. 
• As a percentage of net pay. 

A court determines the type and amount of wage garnishment or garnishments in a document called a wage garnishment order. If there are multiple garnishments for a particular person, the court or the state will establish the priority order of those paycheck garnishments.  

Garnishment orders can apply to all kinds of payroll processes, including regular payroll, custom payrolls, Christmas bonuses, termination pay, and more. 

Wage Garnishment and Privacy 

Wage garnishments involve private information between an employee, the legal system, and an employer. An employer may not dismiss or discriminate against any employee who has a wage garnishment order.  

How to Garnish Wages 

It’s your responsibility to ensure that the wage garnishment orders are followed correctly, or you may risk being out of compliance. Following garnishment orders can be very convoluted. 

• Garnishment orders are forwarded to an employer by the courts.
• There may be multiple wage garnishment orders in place. 
• Wage garnishment orders can originate in different states or jurisdictions. 

Construction Payroll Software Simplifies Garnishment Calculations  

You need a comprehensive system that allows you to create garnishment calculations and deductions when they affect your employees. Your software should also allow you to customize garnishment rules that apply and process the garnishments.   

Ask yourself if your payroll software can handle the complexities of wage garnishment.  

What features are necessary for calculating garnishments accurately and easily?  

1. Wage garnishment feature should be scalable and flexible. 
2. System defaults should allow you to enter garnishment type(s), order of garnishments (if necessary), and set rules for wage garnishment according to the court order. 
3. Does your software provide enough flexibility to allocate payroll so that employee has some disposable wage as well?
4. Garnishments can have start and end dates and an advanced system should be able to turn them off and on as needed.  

Scalable and flexible systems save you time calculating wage garnishments for payroll. That’s critical for large organizations to remain in compliance with legal requirements for wage garnishment.  

There may also be rare instances when your construction payroll software needs to calculate and hold back pay for a new employee if that employee did not meet wage garnishment deductions because they left a job in a different state.  Alternately, as an employer you may find yourself responsible for back pay that is owing to an employee who was deducted twice for garnishments.   

Wage Garnishment Process   

After payroll has been completed, you must provide a check stub to the correct government and legal agencies to report the deduction and stay compliant with the garnishment order. Your employee must also be able to clearly identify the wage garnishment type and amount on their check stub.  

Within eCMS Construction Payroll Software, there are several types of garnishments for each jurisdiction which will process during the same payroll cycle.  Garnishment rules within eCMS system can be used to apply order of deduction and deduction limits as dictated by the multiple jurisdictions.

Get in touch with us today for more information about how our construction payroll software can help simplify wage garnishments for your company.