Handling wage garnishments of your employees’ paychecks – including communication – is a very sensitive issue.
The Great Recession might be over but the economy remains tepid as many Americans struggle. That includes bad debts, child support payments and student loans. For instance, 2016 published reports indicate that 40 percent of student loans are in default.
Money issues from involuntary wage garnishments are very embarrassing to employees. Such situations pose a threat to your employee relationships and morale.
Meantime, you must process wage garnishments with lawful diligence.
To handle garnishments with skill, here are four tips:
1. Notify your employee in writing
Companies aren’t required to notify workers of wage garnishments, but this is to show respect to your employee.
Remember the Golden Rule. Be empathetic and protect confidentiality.
Hopefully, it will alleviate the employee’s angst and embarrassment.
Your letter should inform your employee of three things – who obtained the garnishment, how much money will be withheld, and duration of the garnishments.
Even if the person has left your company, he or she should be notified. And the debt collector should be told.
2. Inform your HR and payroll departments
Notify your human resources and payroll departments. Many employees have a tendency to ignore the letter.
Next, you must begin to honor the garnishment and forward the funds to the debt collector. Often, it has to be over the employees’ objections.
3. Reassure your employee
Take steps to keep a good relationship with your employee. Let the person know he or she will stay employed.
It’s unlawful to terminate a worker over a single debt. But it’s permissible to part with a worker who faces a second consequent debt.
4. Notify the person of reimbursement costs
In some states it’s lawful for a company to get reimbursement from such workers for the extra time expended to process wage garnishments. But the employee should be notified.
Personally, in most situations, I wouldn’t recommend seeking reimbursement from an employee. It would only exacerbate the situation.
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“Fairness is such a valuable thing, that no money can buy it.”
– Alain-Rene Lesage