Setting Up Garnishments

This chapter discusses how to:

• Set up a garnishment deduction.

• Define disposable earnings for garnishments.

• Set up garnishment rules.

• (USA) Maintain garnishment proration rules.

See Also

Administering Garnishments

Setting Up Vendors

Setting up a Garnishment Deduction

This section discusses how to:

• Set up the Deduction table for garnishment deductions.

• Set up the General Deduction table for garnishment deductions.

Setting Up the Deduction Table for Garnishment Deductions

To define deduction information for garnishments:

1. Specify a garnishment deduction priority on the Deduction Table - Setup page.

   1. Enter a number that is large enough to enable the system to deduct taxes and required deductions before it attempts to deduct garnishments in the Deduction Priority field.

   2. Select Garnishment in the Special Processing field.

      This deduction code becomes the default garnishment deduction code.

      Arrears do not apply to garnishment deductions. Instead, establish a proration rule.

      Note. (CAN) For Canada, there is no default garnishment deduction code because you can define multiple before-tax and after-tax deduction codes to process garnishments. In addition, proration rules don't apply for Canada.

2. Assign a garnishment deduction classification on the Deduction Table - Tax Class page.

   1. For the U.S., select After-Tax as the deduction classification. For Canada, select Before-Tax or After-Tax.

      For example, a Canadian child support garnishment might be a before-tax garnishment.

   2. Select None as the Canadian sales tax.

3. Specify how the garnishment affects taxable grosses on the Deduction Table - Tax Effect page.

   • For U.S. companies, garnishments have no effect on taxable grosses.

   • For Canadian companies: after-tax garnishments have no effect on taxable grosses; before-tax garnishments do affect taxable grosses.

4. Specify how the system deducts the garnishment from pay on the Deduction Table - Process page.

   1. Don't select the Partial Deduction Allowed check box.

   2. Select the Deductions Taken From Sep Chk (deductions taken from separate check) check box for U.S., Canada, and U.S. federal government.

   3. Don't select the Deduction Arrears Allowed or Stop Deduction at Termination check boxes.

      (For Canadian processing, this would be the recommended setup).

   4. The Maximum Yearly Deduction field should be left blank.

      Define the garnishment limit on the Garnishment Specification Data page when setting up an employee's garnishment.

Note. Don't specify garnishment withholding frequencies on the Schedule page in the Deduction Table component (DEDUCTION_TABLE). Define the withholding frequency for garnishment deductions at the employee level on the Garnishment Specification Data page.

See Also

Defining Deductions

(USA) Maintaining Garnishment Proration Rules

Setting Up the General Deduction Table for Garnishment Deductions

To establish a garnishment deduction, select Flat Amount as the deduction calculation routine on the General Deduction Table page. The system automatically calculates the amount based on the employee's Garnishment Specification records, and deducts the appropriate amount, depending on the garnishment rules.

See Also

Defining General Deductions

Defining Disposable Earnings for Garnishments

To define disposable earnings for garnishments, use the Disposable Earnings Defn (GARNISH_DE_DEFN) and Disposable Earnings Defn CAN (GARNISH_DE_DEFN_CN) components.

This section provides an overview of disposable earnings for garnishments and discusses how to:

• (USA) Review and update U.S. disposable earnings definitions.

• (CAN) Review and update Canadian disposable earnings definitions.

Understanding Disposable Earnings for Garnishments

Disposable earnings are the earnings subject to garnishment. What constitutes disposable earnings varies according to the governing jurisdiction (that is, federal, state, provincial, or local authority). For example, a disposable earnings definition might specify the calculation of an employee's gross earnings minus all federal and state taxes and health insurance premiums.

Note. Use the calculation formula to define which taxes subtract from the disposable earnings.

See Setting Up Garnishment Rules.

PeopleSoft maintains and delivers the standard federal and state disposable earnings definitions with Payroll for North America.

Important! The PeopleSoft-maintained garnishment disposable earnings definitions are complete as delivered except for deductions to include or exclude when determining the disposable earnings subject to garnishment. During the implementation process, enter the deductions pertaining to specific disposable earnings definitions.

Note. Courts and other authorized jurisdictions frequently issue garnishment orders defining disposable earnings definitions that are different from standard definitions. In such a case, use the Disposable Earnings Definition page to establish a record of the court's individual definition. You are responsible for maintaining these records.

(USA) U.S. Federal Tax Levies

For U.S. federal tax levies, the Internal Revenue Service defines disposable earnings as gross earnings minus voluntary and involuntary deductions in existence when the employer receives the garnishment order. Therefore, you can apply only involuntary increases in those existing deductions to the disposable earnings calculation for garnishments of this type.

PeopleSoft provides FEDTAXLEVY as the DE definition ID for federal tax levies and for state tax levies for which the same rules apply.

Note. For the DE definition ID FEDTAXLEVY, use the Deductions Reducing DE (deductions reducing disposable earnings) group box to identify only those deductions that you cannot apply to the disposable earnings calculation.

(CAN) Canadian Federal Disposable Earnings Definitions

PeopleSoft provides and maintains two Canadian federal disposable earnings definitions:

• FEDERALCAN: Includes taxable benefits and subtracts statutory deductions (that is, income tax, Canada and/or Quebec Pension Plan [CPP/QPP], and Employment Insurance [EI]).

• FEDCANEXBN: Excludes taxable benefits and subtracts statutory deductions (that is, income tax, CPP/QPP, and EI) .

Pages Used to Define Disposable Earnings for Garnishments

Reviewing and Updating Disposable Earnings Definitions

Access the Disposable Earnings Definition page (Set Up HRMS, Product Related, Payroll for North America, Garnishments, Disposable Earnings Defn CAN, Disposable Earnings Definition).

DE Definition ID (disposable earnings definition ID)

This ID links the garnishment disposable earnings definition to the applicable Garnishment Rules table.

(CAN) Adjustment to Gross

The fields in this group box appear on the page only for Canadian users. They are for information only.

Deductions Reducing DE

Some court orders require that you subtract deductions from the employee's gross pay to arrive at disposable earnings. Use this group box to enter deductions to use when calculating disposable earnings.

Note. During the implementation process, enter the deductions to reduce the disposable earnings subject to garnishment.

Loading Deductions to Reduce DE

Access the Load Deductions to Reduce DE page (click Load Deductions on the Disposable Earnings Definition page).

To load deductions:

1. Select a plan type or combination of plan type and benefit plan.

   The system selects all deductions in the plan type or benefit plan that:

   • Are active as of the effective date of the DE definition.

   • Have deduction classification After Tax or Before Tax.

2. Click OK to load deductions that meet the criteria into the Garnishments DE Deduction table (GARN_DE_DED) and into the grid on the Disposable Earnings Definition page, where you can further edit the list.

3. Click the Load Deductions option on the Disposable Earnings Definition page to return to this page to select and load deductions from additional plan types or benefit plans.

Setting Up Garnishment Rules

To set up garnishment rules, use the Garnishment Rules Table (GARNISH_RULE_TBL) and Garnishment Rules Table CAN (GARN_RULE_TBL_CN) components.

This section provides overviews of garnishment formulas and reuse of formulas for the U.S. and discusses how to:

• Identify garnishment rules.

• Specify adjustments to disposable earnings.

• (USA) Enter exemption amounts.

• (CAN) Enter exemption amounts.

• Define calculation formulas.

• Clone an existing garnishment rule.

Note. Payroll for North America provides garnishment rules for the majority of federal, state, provincial, and local garnishment requirements.

Understanding Garnishment Formulas

Define calculation formulas on the Garnishment Rules Table - Calculation Formula page.

This section discusses:

• (CAN) Sample calculation formula.

• (USA) Sample calculation formula.

(CAN) Sample Calculation Formula

This example illustrates how to define the formula for a Canadian garnishment rule (BC garnishment law source and GEN/DEP rule ID):

(USA) Sample Calculation Formula

This example illustrates how to define the formula for a simple U.S. garnishment rule:

(USA) Understanding Calculation Formula Referencing

On the Calculation Formula page, you can define a U.S. garnishment rule for a law source and rule ID by using (referencing) the same calculation formula as another law source and rule ID already defined in the system. This option is particularly useful if both rules use the same types of exemption variables but those variables do not have the same values.

To reference the calculation formula of another rule, select the Use Calculation Formula From Another Garnishment Rule option and enter the law source, rule ID, and effective date of the rule that you want to reference. The referenced rule must have a self-contained calculation formula that does not reference another rule. The system stores the identification of the referenced rule rather than the formula steps.

Note. You must ensure that the exemption variables that you define for the garnishment rule are also used in the rule that you reference. If you define any variables for the rule that are not also in the referenced rule, the system ignores the unused variables during calculation. The values of the exemption variables can differ in the two rules.

Changing a Referenced Rule

When you change a rule that is referenced by other rules, you must determine the impact on the rules that reference it.

For example, if you change rule 1 with a new effective date, you must decide whether those changes also apply to rule 2, which references rule 1.

• If the changes in rule 1 do not apply to rule 2, then you can continue to reference the earlier effective dated row of rule 1 for the calculation of rule 2.

• If (now or at some later time) the changes in rule 1 do apply to rule 2, then you must create a new effective-dated row for rule 2 and reference the new effective date of rule 1 on the Calculation Formulas page.

  Note. The new effective date of rule 2 does not have to match the new effective date of rule 1. The system uses the effective date of rule 1 that appears on the Calculation Formula page for the rule 2 effective date being processed.

Listing Rule References

The third section of the Garnishment Rule Table U.S. SQR report (PAY715) lists each rule that is referenced in other rules along with all the rules that reference it. This section lists the state, rule ID, description, and effective date for each referenced and referencing rule.

The first two sections of the report list the following for each rule by state:

• Section 1: Rule details and exemption variables.

• Section 2: Formula details.

Pages Used to Define Garnishment Rules

Identifying Garnishment Rules

Access the Garnishment Rules Table-Description page (Set Up HRMS, Product Related, Payroll for North America, Garnishments, Rules Table, Description).

Garnish Law Source	The particular jurisdictional entity for the garnishment.
Rule ID	The unique rule ID that identifies a garnishment rule. The rule ID along with the garnish law source links the garnishment rule specifications to the garnishment specification data for an individual employee. Note. (CAN) You can use any rule if it applies to a garnishment situation, regardless of the original province designation. The ZZ value identifies federally related orders.
Maintenance Responsibility	In addition to the PeopleSoft-maintained garnishment rules, you can set up your own garnishment rules to handle any exceptions to the delivered rules. Customer: This value indicates that it is your responsibility to maintain rules that you have revised, cloned, or defined.

Specifying Adjustments to Disposable Earnings

Access the Garnishment Rules Table - Earnings page (Set Up HRMS, Product Related, Payroll for North America, Garnishments, Rules Table, Earnings).

Earnings Code Inclusions/Exclusions

(USA) Entering Exemption Amounts

Access the Exemption Variables page (Set Up HRMS, Product Related, Payroll for North America, Garnishments, Rules Table, Exemption Variables).

Exemption Variables

View or enter values for the variables that you need in the calculation formula for this rule.

Amount Frequency

Select the frequency that applies to the exemption variable amounts for this garnishment rule. The default frequency is Monthly.

Note. If your selections on this page do not match the pay group pay frequency, the system automatically performs a conversion.

(CAN) Entering Exemption Amounts

Access the Exemption Variables page (Set Up HRMS, Product Related, Payroll for North America, Garnishments, Rules Table CAN, Exemption Variables).

Exemption Variables

View or enter values for the variables that you need in the calculation formula for this rule.

Amount Frequency

Select the frequency that applies to the exemption variable amounts for this garnishment rule. The default frequency is Monthly.

Note. If your selections on this page do not match the pay group pay frequency, the system automatically performs a conversion.

Defining Calculation Formulas

Access the Calculation Formula page (Set Up HRMS, Product Related, Payroll for North America, Garnishments, Rules Table, Calculation Formula).

DE Definition ID (disposable earnings definition ID)

Select the disposable earnings definition that you want to use with this garnishment rule. It is important to select the correct DE definition ID. Note. For Canadian garnishment processing, there are only two supported IDs (FEDERALCAN and FEDCANEXBN).

(USA) Referencing a Calculation Formula From Another Garnishment Rule

See (USA) Understanding Calculation Formula Referencing.

Note. These fields are not visible on the page for Canada.

Calculation Formula

Use this group box to create a step-by-step formula for calculating the garnishment or the amount available for garnishment.

Note. (USA) If you select Use Calculation Formula From Another Garnishment Rule, the fields in this group box are unavailable for data entry.

See Also

Understanding Garnishment Formulas

Cloning an Existing Garnishment Rule

Access the Clone Garnishment Rules page (Set Up HRMS, Product Related, Payroll for North America, Garnishments, Clone Rules).

Current Garnishment Rule

Select the law source, rule ID, and effective date of the rule that you want to copy.

New Garnishment Rule(s)

For each new rule that you want to create based on the current rule, enter the law source, rule ID, and effective date.

You can clone one law source and rule ID combination into multiple combinations of law source and rule ID by adding rows and entering the identifiers.

Note. You must enter an effective date for each new rule that you create. You can enter the same effective date for multiple rules as long as the law source and rule ID combination is unique.

(USA) Maintaining Garnishment Proration Rules

To set up garnishment proration rules, use the Proration Rules Definition (GARN_PRORATE_DF) and State Proration Rules (GARN_PRORATE_RL) components

This section provides an overview of garnishment proration rules and discusses how to:

• View garnishment proration rules.

• View garnishment proration rules by state.

Note. (CAN) In Canada proration rules do not apply; courts and authorized agencies issue garnishment orders and determine proration requirements.

Understanding Garnishment Proration Rules

Because garnishments cannot go into arrears, some states require that employers prorate an employee's garnishments when there is insufficient monies available to cover all garnishments of the same type (for example, if an employee has two child support garnishments and not enough money to cover both of them).

In processing, the system uses the proration rule of the state from the Garnish Law Source field on the Garnishment Spec Data 6 page.

See Also

(USA) Applying Garnishment Rules

Pages Used to Maintain Garnishment Proration Rules

Viewing Garnishment Proration Rules

Access the Proration Rules Definition page (Set Up HRMS, Product Related, Payroll for North America, Garnishments, Proration Rules Definition, Proration Rules Definition).

PeopleSoft maintains the Garnishment Proration Definition table with a proration rule ID and text for each rule used by states that permit proration of garnishments. If you make any changes or additions to this table, you become responsible for maintaining these records.

See Also

Entering Colorado Child and Spousal Support Orders

Overriding Garnishment Proration and Specifying Pay Mode

Viewing Garnishment Proration Rules by State

Access the State Proration Rules page (Set Up HRMS, Product Related, Payroll for North America, Garnishments, State Proration Rules, State Proration Rules).

Effective Date	The system displays multiple rules for the same combination of proration rule state and type of garnishment in descending order of effective date.
Proration Rule ID	Identifies the proration rule from the Garnishment Proration Definition table.
Definition	Displays the text of the rule the payroll system follows when applying the proration rule. PeopleSoft maintains this information in the Garnishment Proration Definition table.

Establishing a General Ledger Account for Company Fees

When you remit a payment for an employee garnishment deduction via Accounts Payable, the amount paid will include only the garnishment amount and any payee fees. Any company fee, on the other hand, is retained to cover your administrative costs incurred in processing the garnishment.

To ensure that company fees are correctly processed, you must specify the General Ledger account for the company fees. Enter this information on the General Ledger Liability Accts page in the Company component.

See (Payroll for North America) Entering General Ledger Account Codes.