You create and manage garnishments for US employees in the Payroll > Garnishments screen of the employee's record in the People feature. General information about using the People feature is available in the topic The People Feature.
Before You Begin: While the basic process for creating garnishments is similar for different countries, garnishments for US employees require specific details. For general information about garnishments in Dayforce, see Garnishment Management.
Third-Party Payees
Garnishment entries must be assigned third-party payees. Some third-party payees, such as for family support, are configured in Dayforce as system payees, and they can be selected when you create a garnishment entry. The application only allows you to save a garnishment entry if you have selected a third-party payee.
If the third-party payee has not been set up as a system payee, you must add the third-party payee as the recipient that Dayforce sends payments to.
In Payroll Setup > Third Party Payees, in the Payees tab, you can add custom payees or review system payees in the expandable sections Custom and System, which are located in the left navigation panel in the Payees tab.
When you select a third-party payee entry, the General section of the payee entry shows information about the third-party payee in the following fields:
- Name: Name of the third-party payee.
- Operating Country: Drop-down list with the country of the third-party payee.
- Payee Category: Drop-down list with the category of the payee (for example, Benefit, Child Support Payment, Garnishment, and so on), which is set up in Payroll Setup > Third Party Payees in the Payee Categories tab.
- Active: Checkbox that, when selected, marks the payee as active.
- Description: Optional field to enter a description of the third-party payee.
- Assign To: Drop-down list to select whether the payee can be used with deductions, earnings, or both.
- Reference Code: Field for the cross-reference (XREF) code.
When the Payee Category of a third-party payee is either Garnishment or Child Support Payment, the payment is handled by Dayforce Payment Solutions. In such cases, the Payment Method section of the third-party payee entry displays a note that the payees must be paid by Dayforce Payment Solutions, as seen in this screenshot:
See Third Party Payee Configuration.
| Garnishment Type | Description |
|---|---|
| Federal Administrative Wage Garnishment - 506 (Federal only) |
A Federal Administrative Wage Garnishment is a debt collection process that allows a federal agency to order a non-federal employer to withhold up to 15 percent of an employee's disposable income to pay a delinquent non-tax debt owed to the agency. |
| Bankruptcy – 501 (Federal only) |
A Federal Bankruptcy garnishment occurs when an employee (called an obligor or debtor) has ordered by a bankruptcy court to have an amount withheld for the repayment of a debts. The employer is served a garnishment to withhold an amount and remit the withheld amount to trustee who will pay the creditors. The Consumer Credit Protection Act (CCPA) does not limit the amount of funds that can be withheld from an employee. |
| Federal Tax Levy - 503 (Federal only) |
A Federal Tax Levy garnishment occurs when an employee (called an obligor or debtor) has an unpaid tax debt where the federal government is owed the funds from the employee and seeks a legal means to collect the debt. The employer is served a garnishment (also called a wage attachment or levy) to withhold an amount and remit the funds to the federal government that is owed. |
| Student Loan - 505 |
A Student Loan garnishment occurs when an employee (called an obligor or debtor) has ordered by a court or a government agency to have an amount withheld for the repayment of a student loan debt. The employer is served a garnishment to withhold an amount and remit the withheld amount to the court, a government agency, or directly or through a third party. The Consumer Credit Protection Act (CCPA) limits the amount of funds that can be withheld from an employee. The Student Loan garnishment might be a federal student loan or a state student loan. Federal Student Loans can be divided into two types depending on the types of loans. They can be issued under the Debt Collection Improvement Act (DCIA) or the Higher Education Act (HEA). If the Garnishment Authority is Federal, then DCIA or HEA must be indicated. Generally, a private student loan is treated as a creditor garnishment. |
| Current Support - 502 |
A Current Support (or Child Support) garnishment occurs when an employee (called an obligor or debtor) has ordered by a court or state child support enforcement agency to have an amount withheld for the support of a child. The employer is served a garnishment (also called in Income Withholding for child support) to withhold an amount and remit the withheld amount to the court, state child support enforcement agency, or directly or through a third party. The Consumer Credit Protection Act (CCPA) limits the amount of funds that can be withheld from an employee. |
| Spousal Support - 513 |
A Spousal Support garnishment occurs when an employee (called an obligor or debtor) has ordered by a court or state child support enforcement agency to have an amount withheld for the support of a spouse. The employer is served a garnishment (also called in Income Withholding for Spousal support) to withhold an amount and remit the withheld amount to the court, state Spousal support enforcement agency, or directly or through a third party. The Consumer Credit Protection Act (CCPA) limits the amount of funds that can be withheld from an employee. |
| Creditor Garnishment - 507 |
A Creditor Garnishment garnishment occurs when an employee (called an obligor or debtor) has an unpaid debt where the person or company (called an obligee or creditor) that is owed the funds from the employee seeks a legal means to collect the debt. The employer is served a garnishment (also called a wage attachment or income execution) to withhold an amount and remit the withheld amount to the oblige/creditor directly or through a third party. The Consumer Credit Protection Act (CCPA) limits the amount of funds that can be withheld from an employee. |
| Criminal Restitution - 508 |
A Criminal Restitution garnishment occurs when a court orders a person who has committed a crime (employee) to pay back to the victim for losses suffered because of the crime. Common examples include costs associated with medical bills, counseling, loss of earnings, property expenses, funeral expenses, insurance deductibles, and incidental expenses. The order requires the employer to deduct a certain amount of money from the debtor’s paycheck to repay the ordered costs. The Consumer Credit Protection Act (CCPA) does not limit the amount of funds that can be withheld from an employee. |
| State Tax Levy - 504 |
A State Tax Levy garnishment occurs when an employee (called an obligor or debtor) has an unpaid tax debt where a state is owed the funds from the employee and seeks a legal means to collect the debt. The employer is served a garnishment (also called a wage attachment or income execution) to withhold an amount and remit the withheld amount to the state that is owed. The Consumer Credit Protection Act (CCPA) does not limit the amount that can be protected or withheld arising from a state tax debt. |
| Voluntary Wage Assignment - 515 |
A Voluntary Wage Assignment garnishment occurs when there is an agreement between an employee (called an obligor or debtor) and an employer that says that the employee gives permission for the employer to deduct an amount from their paycheck and remit the funds that were withheld to the creditor. The Consumer Credit Protection Act (CCPA) does not limit the amount of funds that can be withheld from an employee because the agreement is voluntary. |
Garnishment Calculation for US Employees
You can configure Dayforce to calculate garnishment deductions through the following methods:
- Per Check: deducted as a straight Dollar amount.
- Percent: Usually this is a percentage of disposable income. In some cases, it might be a percentage of gross pay, depending on the jurisdiction and garnishment.
- System Calculated: Dayforce calculates the maximum allowable deduction based on the jurisdictional rules and the garnishment type.
Regardless of the calculation method, calculations of scheduled garnishment deductions automatically respect jurisdictional rules. These rules are used to determine the employee's disposable income and any amount of pay that is protected from being garnished. As a result, Dayforce might calculate a deduction amount that is less than what you enter for the garnishment in the garnishment entry.
For state garnishments, Dayforce uses the rules of the employee's primary work state. For federal garnishments, Dayforce uses federal rules.
Even if a garnishment originates from a different state, the application still uses the rules of the employee's work state to calculate the garnishment payment. For example, if a garnishment originates from Minnesota but an employee works in Wisconsin, the application uses the Wisconsin rules. You can override the primary work state, if necessary.
Support Agency Fees (fees charged by the Issuing State and remitted to the Issuing State for Child or Spousal Support) are driven by the Issuing State rather than the Employee’s Primary Work State or Override Work State like other items such as exemption tests and employer retained fees.
The earnings and deductions that can be included in the calculation of disposable income depend on the jurisdictional rules and garnishment type. For example, a garnishment might not allow certain types of taxable benefits to be garnished. Taxes are always excluded from garnishment calculations, because they aren’t part of disposable income.
In some cases, you might need to manually exclude individual earnings and deductions from the disposable income calculation of a garnishment. See Disposable Income for US Employees.
Separate Calculation Per Payment
Dayforce calculates garnishments on each of an employee's payments separately, including running the jurisdictional rules for the type of garnishment. For example, an employee has the following payments in a pay run:
- Normal pay for $1,000
- Additional earnings of $1,000 on a separate check, with a check template that allows garnishments
The employee has a Federal Administrative Wage Garnishment, which is configured to calculate the maximum deduction of 15% of the employee's disposable income. As a result, the application calculates 15% from each check separately.
You can prevent additional garnishment deductions by setting a manual limit, if necessary. See Limit Period. You can also exclude the earning from the disposable income in the garnishment details, or you can exclude garnishment deductions from the check template. More information is available in the topic Garnishment Order Details for US Employees.
This are some exceptions. Federal Tax Levies (including Arizona and Michigan State Levies that use Federal Tax Levy exemption rules) are based on a per pay period limit systematically, because the exemption applies to a pay period rather than per check.
Arrears (Current and Spousal Support Only)
When the application isn’t able to collect the amount that you define in the garnishment details, the application does not automatically generate an arrears record. You can manually add arrears to a garnishment order, if it is applicable for the garnishment authority and type.
Normally, arrears are included on support orders. The support order shows a breakdown between Current Child Support, Past Due Child Support (or Arrears), Current Spousal Support, Past Due Spousal Support (or Arrears), and some currently non-supported amounts such as Current Cash Medical Support, Past Due Cash Medical Support and Other Support.
Fees
The application does not automatically add employer fees to garnishment deductions. You manually add fee garnishments to a garnishment order, if it is applicable for the garnishment authority and type.
For more information on creating and managing garnishments for US employees, see the following topics: