Wage Garnishments

A simple, no-nonsense understanding.

Wage garnishments are an ugly necessity. At some point the employee incurred a debt, didn’t pay and the creditor had no other choice but to file suit. Filing suit costs more money, more time and more grief. A lawsuit is never the preferred course of action. Garnishment is never the preferred course of action. The employee has likely been provided numerous opportunities to pay their debt, but for some reason has failed or refused to do so. Only with a wage garnishment the employee’s creditor may finally receive justice after some time, at the expense and aggravation of their employer.    

For the employer, garnishments present several challenges. First, a wage garnishment increases the likelihood that the employee will seek other employment, as many have every payroll dollar already spent with prior obligations. Secondly, garnishments consume HR time that could be spent elsewhere. Calculating the correct withholding amounts can be an arduous and time consuming task. Finally, and the least understood, when an employer receives a Garnishment Order from the Court it makes them the ‘Garnishee Defendant’. This then makes the employer legally liable to withhold and submit the correct amount of earnings from the employee’s wages.

A Garnishee Defendant may have their payroll records subpoenaed at any time to validate correct withholding calculations are being made. If amounts aren’t withheld, or the incorrect amount is calculated, the employer can be compelled to pay the difference- even if the employee may no longer be in their employ at the time of subpoena. This can be an expensive lesson for those that fail to understand the legal implications and responsibility of calculating and submitting the correct amount for wage Garnishment Orders.  

Our government often makes things more complicated than need be. Compound that with the legal system’s dynamic interpretation of law/policy and it’s no wonder why there is so much confusion with Garnishment Orders. The following is a simple way to understand wage withholding calculations:

The Federal Government minimum wage is $217.50 per pay period ($435.00 bi-weekly); this is the minimal Net Pay (aka ‘take home pay’) every employee is entitled to keep after (only) tax withholdings. Two necessary calculations to determine correct amount of withholding:      

1^st Calculation

Gross Wages

Minus Tax Withholdings

Equals Net Earnings

Times 25% (amount stated on Garnishment Order)

Equals Garnishment Withholding*

2^nd Calculation

Net Earnings

Minus Garnishment Withholding

Net Pay (Must Be Greater Than $217.50, or $435.00 if bi-weekly pay period)

 If Net Pay is less than $217.50 (or $435.00 if bi-weekly pay period), subtract this amount from Net Earnings and withhold the balance remaining.

*Any non-tax deductions are to be withheld after Garnishment Withholding (before insurance, investment or any other non-tax deductions).

We often see payments submitted of $217.50, or even amounts such as $50 or $100 paid per month. These amounts are always an indication the Garnishee Defendant a) does not understand the proper way to calculate withholdings or b) does not care and submits an amount they think will appease the creditor and lessen the possibility of the employee quitting. In the world of legal collections this is a big red flag. Most employers fail to understand the risk and potential liability they face in not fully complying with the terms of a Garnishment Order.  A subpoena of records could result in an unexpected cost for the business.    

Again, we understand garnishments are ugly and a burden on business owners and HR departments. We get it. Unfortunately, this burden on you is often the last recourse for the employee’s creditor(s) to finally receive the justice to which they are entitled.

The staff at Green, Richard & Trent is here to help employers understand wage garnishments and the legal pitfalls of ignoring, delaying or incorrectly calculating wage withholdings. Feel free to call or email us at any time for questions.

For Indiana Code regarding garnishments and further instruction please see the following link:

Indiana Wage Garnishment Calculations

Payment Submissions

In order for funds to be applied by the Clerk’s Office, the following information must be included with every payment submitted:

1)Individual’s full name.

2) Court’s full case number (located at the upper right corner of the garnishment order,
beginning with 02D01, etc.).

3) When a group of names are submitted (rather than one check per person), the above two
items should be listed for each person, in addition to the amount of money to
be applied to each case.

4) Please remit your payment and the above information to:

            Clerk of Allen Circuit and Superior Courts Small Claims Division 715 S. Calhoun St., Room 200 Fort Wayne IN, 46802

If you have questions regarding the guidelines described above, you may contact the Clerk’s Office direct at (260) 449-7130.