You may receive a court-ordered wage garnishment or income withholding order as an employer. This article will help you understand your legal obligations and how to comply with the post-tax income withholding orders using Gusto Payroll.
Employer Obligations
Typically, employees already know that an income withholding order is being enforced, but it is best practice to supply them with a copy of the order for their records. Wage garnishments are a sensitive matter and should be discussed privately with the employee. We recommend that you record the date of notification in the employee's HR records for additional compliance. Original copies of garnishment orders must be given to HR and should only be disclosed to the person or team responsible for payroll processing.
Often, the order enforcement date may overlap with a payroll period. We also suggest adding the date the order was received with a copy of the envelope in your HR records. Though this step is not required, it's good practice if your business ever needs to explain any discrepancies surrounding the first wage withholding.
Lastly, the wage garnishment must be enforced for all future payrolls. Wage garnishments may only be deactivated by employment termination or receipt of another court order prohibiting an adjustment.
Entering Wage Garnishments in Gusto Payroll
Login to your Gusto dashboard
Navigate to the 'People' module and click Team members
Select the applicable employee
Scroll down to the bottom of the employee's profile and click 'Add Garnishment or Custom Deduction'
Choose the garnishment type and enter the withholding details, then Save
To confirm the wage garnishment is active, it should now appear at the bottom of the employee's profile under the Deductions section.
Hooray! 🥳 You've successfully complied with the wage garnishment order. Now you'll proceed with payroll processing as usual. You'll see the recurring deductions on the payroll preview and payroll journals going forward.
References
Gusto Help Center- Add or remove a garnishment or other post-tax deduction. (2023). Gusto.com. https://support.gusto.com/article/100153636100000/Add-or-remove-a-garnishment-or-other-post-tax-deduction