Wage Garnishment Release and Covid 19

We are in the midst of a health crisis. The global pandemic, Coronavirus, has affected every aspect of the market. But, employers are responsible for the wage garnishment and wage garnishment release. It is important that you don’t ignore your duty because otherwise, you will be liable for the entire debt. There are a lot of collection lawyers that are looking for ways to capitalize on your mistakes.

Because of the Coronavirus, local, state, and federal agencies have provided relief to the taxpayers. For example, New York announced that all the ‘student and medical debt collection’ would be discontinued for 30 days. In the state of California, a grace period of 90 days has been provided for mortgage payments. But the one thing that has remained unchanged is the wage garnishment release. 

Wage garnishments occur when your employer receives a court order for taking a portion of your income. This continues until the entire debt is settled or the court orders a wage garnishment release. If you don’t pay your taxes in full, it will result in IRS garnishing wages. If you don’t pay child support, alimony, or federal loan payments, your wages can be garnished. Also, if you have taken money from a creditor, they can sue you for not making payments. If they win the judgment, your employer will get a court order for garnishing your wages.

Keeping in mind the current state of the pandemic, some states have put out orders on limiting the in-person work. This has affected the payroll of many employees but not the rules of wage garnishment release. If you want to avoid any default judgment against you, here are the three steps you need to take as an employer:

3 Steps to Avoid Default Judgement On Wage Garnishment and Wage Garnishment Release

Plan ahead

As an employer, you have to take precautionary measures to avoid a default judgment. Employers must expect to receive notices of IRS garnishing wages, court-issued garnishments, and child support via mail or agents. So, you have to plan beforehand for a large influx of wage garnishment. 

Prepare a system

Now that the pandemic here, you have to create a system for collecting and responding to the wage garnishment in the best possible way. You have to be in a position where you can show to a judge that you had a system in place for addressing the wage garnishment. When you have the opportunity, fix any backlogs that might have resulted. Make sure to document this plan so that if you are not able to send the garnishment, you have a reasonable explanation to give it to the judge.

Be aware of the different wage garnishments and special rules they have

Different wage garnishments have special rules put in for the pandemic. As an employer, you will have to juggle student loan orders, child support orders, creditor garnishments, and IRS garnishing wages. These are already complicated and the COVID-19 pandemic has added an extra layer of complexity .

Different types of wage garnishments during COVID-19 and the wage garnishment release available

1. Child Support

The Office of Child Support Enforcement of the U.S. Department of Health and Human Services has confirmed that the child support orders must be fulfilled. There is no wage garnishment release for child support. They have an e-IWO or Electronic Income Withholding Orders system. It is a cost-effective and efficient way of exchanging orders of income withholding. State agencies are also processing payments of child support. All employers should enroll in the e-IWO. If they already do, they might want to confirm it.

Federal Student Loan

Unlike the child support garnishments, student loans have been paused by the U.S. Department of Education from 13th March 2020. According to the directive, all federal student loan garnishments have been suspended for at least 2 months. Also, all the private collection agencies have been instructed to stop the proactive collection activities. This means that new administrative orders might be issued for the wage garnishment release. 

Currently, the DEO has advised all the employees whose wage garnishments have continued even after 13th March 2020, to contact the human resources department of the employers. The DOE might extend the order after the 60-day hiatus has ended. All the loan service providers have to communicate to the borrower if they resume the payment after the period has ended.

On 27th March 2020, the CARES Act became the law. It provided clarity and legal authority to the actions of the DEO for stopping wage garnishment. According to Section 3515 of the act, the DOE has suspended all federal student loan garnishments until 30th September 2020. But, it is important to note that only the garnishments that are authorized by the  Debt Collection Improvement Act and the Higher Education Act. There is no order regarding the private loan wage garnishment release.

Tax levies

Tax levies garnishments will depend on the jurisdiction. There are some states that have halted all the collection actions. For example, the governor of Kentucky has directed the Department of Revenue of the state to stop all the collection methods. Also, the IRS has reduced staff in its call centers. So, if the employees want to contact the agency about the IRS garnishing wages or a wage garnishment release, they will have to go through extra wait times because of the high call volumes.

On 25th March 2020, People First Initiative was released by the IRS for helping people that are facing challenges in the midst of the health crisis. According to this, the federal agency has suspended all levies and liens initiated by the officers for IRS garnishing wages. This also includes the new systemic, automatic levies, and liens as well.

Creditor loans

Creditor wage garnishments follow the state procedure. So, they will depend on the directives that were issued in their jurisdiction.

Get Expert Help for Wage Garnishment and Wage Garnishment Release

COVID-19 has brought upon a lot of challenges. But, employers also have to face the obligation of wage garnishment as well as wage garnishment release. By taking the help of a tax expert, you will be able to handle IRS garnishing wages better and minimize risk.