Garnishment Administration
Best Practices
Carolinas Payroll Conference
Amorette Nelson Bryant (Amy)
November , 2014
Focus
End to end process for handling wage attachments ◦ Identify receipt location
◦ Tracking documents/correspondence
◦ Initial document review
◦ Document entry/audit/review
◦ Outputs
◦ Scheduling and Timelines
◦ Staffing considerations
© 2014, Amorette Nelson Bryant
Control Document Delivery
Creditor Garnishment Provide Secretary of State address
where legal documents must be delivered
Engage a Registered Agent in each state where doing business ◦ Request electronic delivery
Record legal document delivery address with Sec of State
Refuse delivery if not in compliance with state law ◦ Provide service address to process server
© 2014, Amorette Nelson Bryant
Control Document Delivery
Support Enroll in IWO program (32 states) Identify delivery address with new hire
reporting registration Register 3rd party in states when
required ◦ Texas identifies requirements in employer
handbook
Notify state agency if IWO’s are sent to wrong address ◦ Staff might use information other provide
instead of checking records
© 2014, Amorette Nelson Bryant
Control Document Delivery
IRS Levy Send letter, to regional IRS offices
with mailing correct address ◦ Use stationary with company letterhead
© 2014, Amorette Nelson Bryant
Control Document Delivery
Ongoing
Update address when changed Update address and company name
with acquisition Notify of divesture of subsidiaries Refuse new creditor garnishments if
garnishee name is incorrect ◦ Current garnishee name should be used
© 2014, Amorette Nelson Bryant
Control Document Delivery
Internal
Train mailroom personnel ◦ Types of garnishments received
◦ Document names
For payroll or another department? ◦ Non-wage garnishment - AP
◦ National Medical Support Notice - HR
◦ Plaintiff is the company - Legal
Use distinctive envelopes/bins for interdepartmental garnishment mail
© 2014, Amorette Nelson Bryant
Receipt of Documents
Paper Is this a document the garnishment
department handles? ◦ No, return to mailroom, correct
department, or sender as applicable
◦ Yes, go to next step
© 2014, Amorette Nelson Bryant
Record Documents Received
Paper Record document in log
◦ Log refers to method used to record and
track documents
Primary purposes are:
◦ Record all documents received
◦ Track critical steps from receipt to set up
◦ Verify the attachment is processed on
time
© 2014, Amorette Nelson Bryant
Receipt of Documents
Paper Upon receipt record:
◦ Date, received, defendant name,
defendant identifier, garn type, issuing
party, case ID
Date is the date received at point of entry
Branch office, Registered agent
Record completion of steps during
garnishment processing
© 2014, Amorette Nelson Bryant
Receipt of Documents
Paper Defendant terminated/never employed ◦ No, check with other payers e.g. AP,
pension, retirement account
Yes, forward to other payer
Record in log the date forwarded/where sent
Note: when company is a financial institution certain types of support orders, creditor garnishment or tax debts may require withholding from an account
© 2014, Amorette Nelson Bryant
Receipt of Documents
Paper Defendant terminated/never employed ◦ No and is not paid by another department
◦ No, complete the interrogatory, answer, or acknowledgement and return to sender
All new or modified wage attachments documents require a response if defendant is terminated or never employed
Use letter to answer questions, when document is not provided
Record date returned to sender
© 2014, Amorette Nelson Bryant
Receipt of Documents
Electronic Defendant terminated/never employed ◦ No and is not paid by another department
◦ E-IWO member complete acknowledgement form and send thru portal
◦ 42 states accept e-IWO terminations
◦ E-Term member complete form and send thru OCSE portal
◦ Some courts in several states require response for creditor garnishment be sent electronically
© 2014, Amorette Nelson Bryant
Receipt of Documents for
Employee Review documents to determine: ◦ If the service includes all required items?
◦ Is the garnishment a proper document?
◦ Is the document called something else, but really qualifies as a Garnishment? Income Execution, Trustee Agreement?
◦ Is the employer’s correct legal name identified as the garnishee?
◦ If employee works in a different state than the state where a creditor garnishment is issued, is garnishee name the same?
© 2014, Amorette Nelson Bryant
Receipt of Documents
Paper ◦ Is there sufficient information: complete
name, portion of SSN, age, home address to identify the defendant?
◦ If child support, is the original or amended IWO issued using the federal required form?
Accept both 2011 and 2014 form until 7/31/15
◦ If a 3rd person or attorney issued the IWO is the court order attached?
◦ If child support/family support, is the payment directed to the SDU?
© 2014, Amorette Nelson Bryant
Receipt of Documents
Paper ◦ If support order is for spousal support only
is the correct form use?
◦ If a voluntary form 2159 is delivered, is the document complete and approved by the IRS?
◦ If a Demand Notice for a voluntary wage assignment is delivered, was the Notice of Intent delivered 20 days prior? (Illinois)
◦ If a voluntary wage assignment is delivered, does it meet the requirements of the state where the employee works?
© 2014, Amorette Nelson Bryant
Review Following Acceptance of
Attachment Do documents require special
handling? ◦ Are there documents that must be sent to
the employee?
◦ Are there documents that must be completed and immediately returned to the attorney and or court?
Some states require immediate response to confirm the defendant is an employee and is due earnings.
© 2014, Amorette Nelson Bryant
Review Following Acceptance of
Attachment Once documents are accepted are
there situations that may affect withholding? ◦ Has the employee filed for bankruptcy
or have a Ch13 repayment plan?
◦ Does the employee work in the state that issued the creditor garnishment, support order, state tax levy, state non tax debt or voluntary assignment?
© 2014, Amorette Nelson Bryant
Review Following Acceptance of
Attachment When the live and work states differ: ◦ What administrative laws must be followed?
◦ What withholding laws must be followed?
If another attachment is in place, which attachment has priority?
If the employee receives a 2nd creditor garnishment or state tax levy does the state allow aggregation of the state/federal limit or allow only one attachment be deducted at the same time? © 2014, Amorette Nelson Bryant
Required Information
Each type of wage attachment must follow specific laws/rules and may be unique to that attachment e.g. IRS levy
The answers to the questions asked in preceding slides are found in federal and/or state laws
Only federal laws apply to:
◦ IRS tax levies
◦ Chapter 13 repayment agreements
◦ Federal administrative wage garnishments
◦ Student loans issued by guaranty agencies
© 2014, Amorette Nelson Bryant
Required Information
State and federal laws apply to: ◦ Child support
◦ Family support
◦ Spousal support (alimony, maintenance)
◦ Creditor garnishment
◦ State non tax debts
◦ Voluntary wage assignments
State laws apply to: ◦ State tax levy
© 2014, Amorette Nelson Bryant
Requirements Documentation
Each type of wage attachment requires separate documentation
Documentation includes spreadsheet and narrative instructions ◦ A document for support would include
requirements that apply to all support orders plus requirements unique to each state
© 2014, Amorette Nelson Bryant
Requirements Documentation
◦ Federal law/rules only Document for federal law by type of
attachment
◦ State law/rules only Document for laws of each state where
you do business
◦ Federal and state law/rules Document for federal law for type of
attachment
Document for laws of each state where you do business by type of attachment
© 2014, Amorette Nelson Bryant
Requirements Documentation
◦ Documentation/procedures must be updated when a federal or a state law (in the states where persons are employed) changes ◦ Review at a minimum once a year to
ensure all changes were made ◦ Person signing off should have some
understanding of the process
© 2014, Amorette Nelson Bryant
What Does the Employer Need
to Know? (Federal) Using creditor garnishment as an
example the employer must know Federal CCPA definition of: ◦ Earnings
◦ Deductions required by law
◦ Disposable earnings
◦ Withholding limit
◦ Aggregated withholding limit
© 2014, Amorette Nelson Bryant
What Does the Employer Need
to Know? (State) Creditor garnishment state where
employees work: State requirements for: ◦ Employer documents
◦ Employee documents/deadline for delivery
◦ Answer/Interrogatory requirements e.g. date(s) due, notary requirement, send to whom
© 2014, Amorette Nelson Bryant
What Does the Employer Need
to Know? (State) State requirements for: ◦ When to begin withholding
◦ Priority of garnishment
◦ Exceptions to federal disposable earnings
◦ State statutory exemption e.g. 40 * SMW
◦ Withholding Limit/aggregation limit
◦ Employer fee
© 2014, Amorette Nelson Bryant
What Does the Employer Need
to Know? (State) • State requirements for: ◦ When to send money/attachments if
required
◦ When to stop withholding
Expiration, balance collected in full
◦ Employee termination notification
◦ Employee return to work requirement
◦ Additional information comments
Sample spreadsheet provided in materials folder
© 2014, Amorette Nelson Bryant
Vender (Payee)
Is the vendor set up and active? Is the vendor address up to date? If the same vendor name is used for
multiple sites such as IRS, is the address set up?
Does your company require a W-9 from attorney’s collecting debts?
Are payments made by EFT rather than by mail?
Must EFT payments be identified during data entry?
© 2014, Amorette Nelson Bryant
Vender (Payee)
Is there a procedure to request a new vendor code?
Does another department set up the vendor code to reduce fraud?
How long does it take to set up a new vendor code?
If the garnishment cannot be entered because the vendor code is required, may a dummy code be used?
If a dummy code is used, are procedures in place to ensure payment is made on time?
© 2014, Amorette Nelson Bryant
Software Requirements to
Support Data Entry Software systems differ on how data must be
entered to obtain the required outcome
◦ Software configuration and requirements must be
understood as well as garnishment laws
Some systems use rule codes
◦ Instead of entering the withholding limit for
support, a rule that corresponds to the limit must
be selected
Some software programs are configured so that the exempt amount must be entered instead of the withholding limit
© 2014, Amorette Nelson Bryant
Data Entry
Documents should be entered within one to two days or receipt
Following are examples of special requirements to consider
◦ Use start date to control future deduction
California – 1st PP that ends 10 days following
receipt
◦ Enter expiration requirement if applicable
◦ Use priority to control which attachments to withhold first
Adjust priority of attachments in place if necessary
© 2014, Amorette Nelson Bryant
Data Entry
◦ Flag to suspend amount deducted if cannot be sent until a future date or event
© 2014, Amorette Nelson Bryant
Data Entry Audit
Data entered should be received before payroll cutoff
Data for new or modified cases should be reviewed by a second person to confirm accuracy
Corrections should be made when error is identified ◦ If unable to make correction before payroll
cutoff, make correction between program calc and final run
© 2014, Amorette Nelson Bryant
Processing Audit
After payroll is calculated, all attachments entered should be reviewed to determine:
◦ Attachments that were released did not deduct
◦ Multiple garnishments withheld in correct order
◦ If garnishment deduction amount must be entered manually
Some states require if garnishment was received
within x days of payday, it must be withheld
© 2014, Amorette Nelson Bryant
Processing Audit
After payroll is calculated, all attachments entered should be reviewed to determine:
◦ If an employee changed work states were the
appropriate state rules updated
◦ If results of system “quirks” must be fixed
PeopleSoft has a situation: when an employee transfers
to a different company, the garnishment deduction does
not move with the record and must be re-entered
© 2014, Amorette Nelson Bryant
Audit/Review Reports
Special reports or queries are helpful in identifying common errors ◦ SUI code state is the same as the rule
state for attachments using state law
◦ All support orders for an employee use the same limit code
◦ Priority code incorrect
◦ States that require a percent of gross should be reviewed to make sure disposable or net disposable was not selected
© 2014, Amorette Nelson Bryant
Supplemental Payroll
Supplemental checks should be reviewed to make sure correct amount is deducted if must be aggregated ◦ Attachments for fixed amount are
generally okay unless full amount was not deducted on regular check
◦ IRS Levies, not entitled to exemption if receive on regular payroll
◦ Creditor, student loan, fed admin wage garnishment not entitled to the statutory exemption if met on regular payroll
© 2014, Amorette Nelson Bryant
Output
Interrogatories Each state has different requirements for
interrogatories for creditor garnishments, tax levies and state non tax debts
Requirements include when an interrogatory must be sent
◦ Immediately – Is debtor employed?
◦ Before deduction takes place – general idea of earnings
◦ After the deduction taken – amount deducted
Some states require an interrogatory be sent each pay period
© 2014, Amorette Nelson Bryant
Output
Interrogatories Some states require an interrogatory
be sent identifying this the last deduction
Some states require an interrogatory be notarized o Must send original signature, not a copy
A few counties or courts within the state require electronic answers ◦ Iowa, Michigan
© 2014, Amorette Nelson Bryant
Output
Interrogatories IRS levy 668W requires the employer
complete the back side of Part 3 and return with the first deduction ◦ If money is not withheld for the levy, Part
3 must be completed and include an explanation as to why there is no deduction
Student loans and federal administrative wage garnishments require an answer be sent
© 2014, Amorette Nelson Bryant
Output
Checks Several states require deductions, for
creditor garnishments, be held for a specific number of days or receipt of another document
Some states require an interrogatory, for a creditor garnishment, be sent with the check
© 2014, Amorette Nelson Bryant
Output
Checks Each type of wage attachment has its
own requirement as to when payment must be sent ◦ Child support – federal law is no later than
7 business days of pay date
◦ Child support – each state has its own law e.g. Texas is same day as pay date
State laws differ as to when deductions must be sent for creditor debt, tax levies and non-tax debts
© 2014, Amorette Nelson Bryant
Output
Checks IRS requires payment be sent same
day as pay date Student loans from guaranty agencies
should be send the same day as pay date
Federal administrative wage garnishments must be sent at least once a month
© 2014, Amorette Nelson Bryant
Output
Electronic Payments 16 states require electronic payments
for support state thresholds are met Minnesota passed a state law
requiring tax levies be paid electronically, however there are difficulties with their system
A committee has been formed to look into standardization of electronic payments for tax levies to all states
Federal government has no plans for levies or non-tax debts
© 2014, Amorette Nelson Bryant
Returned Checks
When checks are returned, the reason for return must be investigated immediately and appropriate action taken
The most common reason for a check to be returned are: ◦ Payee address is incorrect
◦ Payee cannot identify the payment
◦ Case is closed
◦ Payment was sent earlier than it should have been sent
© 2014, Amorette Nelson Bryant
Follow up
Situations that may prevent immediate set up must be monitored to ensure the issue/problem is resolved by payroll close or at the latest before final payroll run
Necessary actions such as completing an interrogatory should be monitored using a tracking other than monitoring deductions taken
© 2014, Amorette Nelson Bryant
Prioritizing Data Entry
What if all the wage attachments received cannot be entered before payroll close? ◦ Prioritize by legal deadlines
◦ Enter releases
◦ Enter reductions
◦ Chose documents that can be entered quickly
◦ Identify any “misses” and schedule to handle before final payroll run
© 2014, Amorette Nelson Bryant
Timeline/Calendar
Prepare an annual calendar and populate all known dates which limit or prevent activities
Continue to add as information becomes available ◦ Specific days and or times when system
cannot be updated
◦ Specific days or times when system cannot be viewed
◦ Holidays or other non work days
◦ Employee scheduled time off
© 2014, Amorette Nelson Bryant
Timeline/Calendar
Coordinate with other departments to identify special events ◦ Bonus payments may result in lump sum
reporting requirements and withholding support from bonus checks
◦ Annual health plan enrollment may affect changes to deductions required for some disposable earnings calculations
◦ Software updates so testing is conducted
© 2014, Amorette Nelson Bryant
Timeline/Calendar
Identify all regular pay cycles Identify payroll cut off Identify when supplemental cycle(s)
run Identify when system is available for
correction/additions before pay run ◦ Adjust for holidays that affect payroll
close, pay run, pay date
© 2014, Amorette Nelson Bryant
Timeline/Calendar
Identify date(s) a significant task must be completed ◦ Work backwards to fill in dates when sub
tasks must be completed
◦ Adjust staff schedules to ensure each sub task and significant task can be completed and are completed in sequential order
◦ Use a checklist to verify all pay period tasks were completed, before payroll cutoff
© 2014, Amorette Nelson Bryant
Timeline/Calendar
Weekly payrolls are most time intensive
Example: Friday is pay period end; data entry must be completed; many payee checks and interrogatories for previous pay period must be completed and mailed by COB Friday while others may be handled on following Monday
◦ Biweekly and Semi monthly payrolls reduce the number of critical tasks that must be performed on the same day
© 2014, Amorette Nelson Bryant
Staffing
There is no magic number for staffing the garnishment department
Take into consideration: ◦ Total number of active documents
◦ Weekly average of documents received
◦ States where employees work
Texas employers have no creditor garnishments or tax levies
Arizona, Colorado, Ohio creditor garnishment requirements are very time intensive
© 2014, Amorette Nelson Bryant
Staffing
The fewer wage attachments that are administered require a proportionately greater number of staff to handle ◦ 500 garnishments 1.5 FTE
◦ 2,500 garnishments 2 to 2.5 FTE
◦ 5,000 garnishments 3 to 3.5 FTE
At least 2 persons must know all the activities involved to fill in if primary person is absent, or requires assistance
© 2014, Amorette Nelson Bryant
Staffing
Manual handling requires more time E-IWO reduces work load for child
support and subsequent reporting data to participating states
Be creative with schedules ◦ If the heaviest work load is on Thursday
and Friday, create a 4 day schedule of two 8 hour days and two 12 hour shifts
© 2014, Amorette Nelson Bryant
Summary
Administering garnishments is the most difficult job in the payroll department ◦ Job grade should reflect the complexity
Budget for periodic training Failure to handle time sensitive
garnishments can be costly Failure to audit or review reports can
be costly Creditors do not make allowances for
employer internal issues
© 2014, Amorette Nelson Bryant
Summary
Refer to materials folder for: ◦ Sample spreadsheet for creditor
garnishment to record state requirements
Links to Office of Child Support Enforcement materials for employers
Links to other helpful sites
© 2014, Amorette Nelson Bryant
Speaker Disclaimer
The topics covered in this presentation touch on
significant activities a garnishment department will
handle but are not all inclusive
Recommendations are based on years of exposure to
various corporate garnishment departments but as
every company is different it is prudent for the audience
to pick and choose or add what they feel best covers
their situation
Ms. Bryant is not an attorney and is not attempting to
practice laws and recommends involving your legal
representative when making critical decisions
© 2014, Amorette Nelson Bryant
Speaker Information
Amorette Bryant (Amy) is recognized by the payroll industry as an
expert in the area of wage garnishment. She is a member of and
previous chair of the APA GRTF for Child Support and Non Support
Garnishments. She was an advisor to the Uniform Law Commission in
1996 regarding employer needs that were adopted in the Uniform
Interstate Family Support Act. Currently she is an observer to the ULC
Wage Garnishment group. Her book was used as the primary source of
information to document garnishment variables from state to state
Amy is a consultant, author and speaker. She is the author of the
Complete Guide to Federal and State Garnishment, 2015 Edition,
Aspen Publishers. She is also a contributing author to other Aspen
Publications. She may be contacted at [email protected]
© 2014, Amorette Nelson Bryant