Understanding Garnishments
Because garnishment orders can come from different agencies, each having different reporting requirements, PeopleSoft Global Payroll for United States enables you to address the priority of each garnishment received by jurisdiction, type, and date or time of receipt. In the case of multiple garnishments of the same type, the system can determine which proration method to use and when. When funds are withheld, you can disburse them according to the method and schedule established by the issuing agency.
This topic discusses:
Delivered garnishment deductions.
Garnishment types.
Garnishment processing.
Garnishment files.
Viewing delivered elements.
PeopleSoft Global Payroll for United States delivers the GARNISHMENT deduction to process all types of garnishments. This deduction has a Calculation Rule of Amount, with the Amount Type set to Payee Level.
You assign garnishments payee by payee on the Assign Garnishments USA component (GPUS_GRN).
PeopleSoft Global Payroll for United States can process several types of garnishments:
Child, spousal, or dependent support.
Court-ordered deductions for support of another person, whether it is a child, ex-spouse, or dependent.
Tax levies.
Federal-mandated or state-mandated deductions for delinquent tax payments.
Creditor garnishments.
Deductions derived from an employee not paying an obligation to a creditor.
Administrative wage garnishments.
Federal-mandated deductions for delinquent non-tax debts owed to the U.S. government.
Student loans.
Deductions for delinquent loans for education granted under the Federal Family Education Program.
Bankruptcy order.
Deductions for employee-declared bankruptcy, which are paid to a trustee of the federal court handling the payments to the employee's creditors.
Wage assignments.
Voluntary employee deduction based on an agreement to directly transfer part of the employee's wages to another party.
When processing garnishments, the system must take into account many aspects of the garnishment:
Garnishment processing for a single garnishment.
Company fees and recipient fees.
Garnishment priority.
Garnishment proration.
Garnishment Processing for a Single Garnishment
The PeopleSoft Global Payroll system performs the following steps to process a single garnishment order:
Check the garnishment order type.
Calculate disposable earnings.
Determine the exemption rule.
Calculate the exempted amount using exemption rule.
Calculate the amount available by subtracting the exemption amount from disposable earnings.
Calculate the total amount required based on the garnishment order.
Calculate the deduction as the lesser of the amounts in steps 5 and 6.
Company Fees and Recipient Fees
Employers and garnishment recipients may charge administrative fees for processing garnishment orders. PeopleSoft Global Payroll for United States enables you to define deductions for these fees and assign them to payees on the Fees page of the Assign Garnishments USA component (GPUS_GRN).
Garnishment Priority
When an employee has more than one type of garnishment order, processing priority is based on the value of the Priority field on the garnishment Assignment page. The lower the priority number, the higher the priority.
Note that the system does not assign priorities automatically when a payee has more than one type of garnishment (priorities must be defined manually). However, it does restrict the relative priorities of garnishments under certain conditions:
When a child support garnishment is already in place, and you enter a federal tax levy, the system does not allow you to assign a higher priority to the tax levy than to the child support garnishment.
Similarly, when a federal tax levy is in place, and you enter a bankruptcy order, the system does not allow you to assign a higher priority to the bankruptcy order than to the tax levy.
In these cases, the system uses the Date Established field on the garnishment Assignment page to control the priorities. For example, if a federal tax levy is established on 1 March 2004, and a child support garnishment is established on 1 January 2004, you cannot give the tax levy priority over the child support garnishment.
Garnishment Proration
Proration occurs when an employee has more than one garnishment of the same type and the total amount available to pay those garnishments is insufficient. Proration occurs most often for child support and writ of garnishment. As a result, states have issued rules about what to do when an employee has more then one child support order or more than one writ of garnishment.
PeopleSoft Global Payroll for United States delivers all of the necessary proration rules for all of the states. For states that do not specify proration rules for a specific garnishment type, the system automatically withholds based on the default proration formula GRN FM FIFO ALL (First Come First Serve All). The rule for this proration formula is Pay total amount of first garnishment received, based on Received Date, followed by other garnishments in order of receipt until the maximum is reached.
Note: You can view the delivered proration formulas defined for each type of garnishment at the state level on the Proration Formula page. For garnishment types for which a state does not provide a rule, you can override the default proration formula (GRN FM FIFO ALL) by creating your own proration rules.
In PeopleSoft Global Payroll for United States, you use the Create Garnishment File USA page to set up and run the garnishment file process for all states that require electronic funds transfer (EFT) transfer of garnishment data.
PeopleSoft Global Payroll for United States delivers a query that you can run to view the names of all delivered elements designed for the U.S. Instructions for running the query are provided in the PeopleSoft Global Payroll product documentation.