Customer Question: How does the New Garnishment Work?
Cougar Mountain Software currently has an employee that has a WRIT (a legal document issued by a court or judicial officer). The WRIT states that for the next 60 days, his company has to garnish 25% of his employee’s net disposable income; however, the remaining take home pay cannot be less than $435.
How does the New Garnishment Work?
Federal law states that there is a Maximum amount that can be garnished from an individual, in any pay period, regardless of the number of garnishment orders received by the employer. For ordinary garnishments, the weekly amount may NOT exceed the lesser of two figures:
1) 25% of the employee’s disposal earnings (after taxes)
2) The amount by which an employee’s disposable earning s are greater than (30) times the federal wage (currently $7.25 an hour = 7.25x 30 or $217.50. This means like in the State of Washington the minimum wage is $8.55 or your exemption key is set to: (25).
Another example is, if you had a part time person only working 10 hours a week for $16.00 an hour. The minimum dollar amount still applies here; they must take home the $160.00 because it is below federal minimum.
Whew! Now how do you set this up in you CMS Software?
You have TWO choices now in Cougar Mountain Software.
Here is an example of the CMS default setting. If you have two employees being garnished (one at 25%, and the other at 60%) then the 60% (as max) would go here, as there would be never a time more that 60% of a check would be garnished.
If you select Garnishment as a “Class Code”, your Code Type will be done for you. But, if you are manually setting up a garnishment, then you have the class code as a Deduction.
If you selected “Per Unit Amount or Percent of Gross” as the Code Type, select how to apply the benefit/deduction in the “Apply Type” section of the window. If this is a garnishment-type code, and you want the minimum wage exemption to apply, leave the default setting of checked for the “Apply Minimum Wage Exemption” check box.
The garnishment law allows up 50% of a worker’s disposable income (after taxes) to be garnished for these purposes. If the employee is supporting another spouse or child, 60% is the default. (60% is CMS already.)
The Original Way:
Select the Code Type. This determines how the benefit is calculated or applied. Your choices are described below:
- Fixed Amount: A fixed amount type uses the same amount for each indicated pay period.
- Variable Amount: A variable amount type uses an amount specified each time payroll is prepared
- Per Unit Amount: A per unit amount type calculates the amount by multiplying units by a preset amount. Specify in the “Apply Type” section of this window which type of units qualify. The amount per unit is specified by selecting the “Benefit” button in the Employee window.
- Percent of Gross: A percent of gross type calculates the amount by using a percentage of gross pay. Specify in the “Apply Type” section of this window, which types of pay qualify. The percentage is specified by selecting the “Benefit” button in the Employee window.
- Variable Units: A variable unit’s type calculates a fixed amount per unit for a variable number of units. The amount per unit is specified by selecting the “Benefit” button in the Employee window. Specify the number of units to calculate inside of the “Prepare Payroll or Enter Adjustments” window, each time payroll is prepared.
If you set up a variable amount, you will be able to put in any amount needed to arrive at the net take home pay needed to give to an employee. To set a Variable up as $160, you would have to enter $145 to get the 25% required, and then go back to the $160.
The New Way:
The Attach file is the copy of the garnishment on your computer.
The right side is for % and the left side is for dollars, with a cutoff amount remaining. The left uses a percent (25) and the ability to cutoff by a date, “Use Withhold Through Date”.
If this is a garnishment, enter the “Served and Effective” dates. If you want to set a specific end date, select the “Use Withhold Through Date” and enter the date. You can also select the “Attach File” button to attach a copy of the garnishment file directly to the employee’s record for future reference. The file appears on the Attachments tab of the PR Employees window.
Now, your software will correctly deduct the amount you need from the check, not going below the $217.50 per week federal law:
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