Third-Party Garnishment Liability: Are You Properly Managing Employee Wage Garnishments?
In today’s economic climate, garnishments have increased as much as 20% over 2007 and are expected to increase up to 38% in 2009. Without a robust compliance program, companies that receive a high volume of wage garnishments can face significant liability exposure to third-party creditors and governmental agencies (including child support enforcement agencies). Federal and state law can impose substantial civil penalties in addition to possible criminal charges for failing to comply with employee wage garnishments properly and in a timely fashion.
Developing a garnishment compliance program can be a challenging undertaking for companies with employees in a number of different states. Although the federal Consumer Credit Protection Act sets basic standards governing compliance with wage garnishments, each state can create supplemental wage garnishment laws adding further employee protections or imposing stiffer noncompliance penalties. As a result, complying with a patchwork of federal and state garnishment and employment laws can be a daunting task. Even so, strict compliance is a must because employers risk potential liability on at least two separate fronts. First, employers can face civil penalties and liability and even criminal charges for not properly withholding and remitting amounts to creditors and governmental agencies. Second, employers can be confronted by wrongful discharge or wrongful dismissal actions and severe civil penalties as high as $10,000 per violation for discharging or firing employees that are subject to a garnishment.
Because garnishment compliance is an extremely time-sensitive process, any compliance program or garnishment processing service should start at your litigation front door—with your registered agent. Only your registered agent can ensure that your garnishments are processed without delay. By flagging incoming garnishments and processing them ahead of other incoming service of process traffic, your registered agent can get you your garnishments sooner. By redirecting garnishments to your registered agent, you can ensure that your garnishments are processed in a one-track channel by highly trained employees who understand the importance of your legal documents.
If you don’t already have a garnishment compliance program, the Corporation Service Company (CSC) can help you develop one that will meet your needs and keep you fully compliant with federal and state law (including adminstrative, IRS tax, student loan, creditor, and child support garnishments). CSC offers a full-spectrum of garnishment solutions ranging from transferring incoming garnishments directly to your current processing system (including customizable capture of key data fields with full integration into your current payroll provider), tools that allow you to track and monitor your current garnishment process, or a full-service garnishment processing service.
CSC’s affordable Garnishment Processing Service reduces your costs, ensures compliance and lets you focus your resources on growing your business. Contact Reyner Meikle via email or 800-927-9801 x3273 to learn how the CSC Garnishment Processing Service can help you reduce costs and risks, or to request a complimentary white paper concerning third-party garnishment liability. Contact Travis Turner via email or 800-927-9801 x3678 to learn how CSC's IRS & Bank Levy Processing Service can help reduce compliance costs for financial institutions.
