What can make work even more stressful than it already is? Having your wages garnished. A wage garnishment is when a court issues an order requiring your employer to withhold a certain amount of your paycheck and send it directly to the person or institution to whom you owe money, until your debt is paid off. If you’re already strapped for cash, imagine receiving your pay check and noticing that it is significantly lower than it already was. Although you can’t be fired for having your wages garnished by one creditor, federal law does not protect you against retaliation or termination if you have more than one garnishment—especially if it is from the same creditor! (Some state laws vary.)
Here’s the pecking order:
- Child support. Up to 60% of your wages can be garnished for child support, and an extra 5% percent can be garnished if your child support is in arrears.
- Student loans. Don’t take out a student loan unless you absolutely, positively have to. That’s my public service announcement. Although they must notify you at least 30 days prior to the garnishment, here’s no court order required for this. They can just come in and take it.
- Back taxes. The IRS is another agency that can garnish your wages without getting a court order first. The amount you get to keep depends on how many dependents you have and your standard deduction amount. Your employer will pay you a fairly low minimum amount each week and pass the rest to the IRS.
Everyone else. Any other garnishments must be presented to your employer via court order. However, they’ll stand in line until the Big 3 are paid off.
A garnishment has an effect on work performance because the employee is constantly worrying about how they are going to pay the non-garnished bills. Financial problems can keep you awake at night, making you less refreshed in the morning for work. Sometimes financial woes lead to other problems such as drug and alcohol abuse. If you won’t take the collector’s call at home, guess what? They have no problem calling your job to verify your employment as well as try to sneak a quick chat in with you to see when you’re planning on sending some money. This distracts you and can cause performance and safety issues. You may begin to worry more because now you're afraid you’ll lose your job and never get the debt paid off.
Furthermore, depending on the percentage of your wages that is being garnished, you might start thinking you made more money delivering newspapers in high school. So what’s the solution?
Don’t spend what you don’t earn. But if you’re already in the garnishment stage, that ship has sailed for you. Consider credit counseling to get some help controlling your spending. Contact your company’s EAP (Employee Assistance Program) to help you deal with the embarrassment and, yes, shame. EAP is a confidential free benefit your employer offers. When you can’t keep your mind on your work, your work will suffer. Your employer may consider you irresponsible and it could also cost you a promotion or reassignment. If you’re not able to manage your own money, why should they trust you to manage their interests?
Come out of the debt cave and get back to enjoying work again. Get the help you need to get on track financially and professionally.