1. Payroll Implementation Guide
  2. Example: Setting Up a Wage Attachment Rule at the DBA Level

Example: Setting Up a Wage Attachment Rule at the DBA Level

This example illustrates when you might set up a wage attachment rule at the DBA level to comply with government regulations:

For this example, assume that federal government regulations specify that commercial garnishments cannot exceed 25 percent of an employee's disposable earnings. Because this rule is a federal regulation, it should calculate for all employees. Therefore, it should be set up at the DBA level.

If all of the employees in the organization had only one garnishment, no rules would be necessary. You could set up the limits on the garnishment wage attachment so that no more than 25 percent of disposable earnings are used to satisfy the garnishment. However, if an employee has more than one garnishment, you must set up a rule so that the system can consider all of the employee's wage attachments to determine the amount to withhold.

For example, assume that a particular employee has these garnishments:

  • Wage Attachment Number 44543, assigned to the employee on March 1, 2003, is a garnishment that is set up to withhold 20 percent of the employee's disposable earnings.

    This wage attachment is set up using DBA 1104.

  • Wage Attachment Number 76658, assigned to the employee on June 1, 2002, is a garnishment that is set up to withhold 25 percent of the employee's disposable earnings.

    This wage attachment is also set up using DBA 1104.

    Assume that the employee's disposable wages for the period are 1000 USD. According to government regulations, no more than 250 USD can be used to satisfy the employee's garnishments. To comply with this regulation, you can set up this rule:

    Parameter

    Description

    Rule Level

    All Employees - Default Level

    PDBA Code

    1104

    Withholding Rule

    3 (Maximum Wage Amounts Withheld as Percentage of Disposable Wages)

    Amount or Rate

    25

    Source of Calculation

    3

    The system calculates the amount of each wage attachment individually and verifies whether any of the rules have been broken. The employee's final withholding amounts are determined accordingly:

  1. Wage attachment 44543 calculates for 200 USD (1000 USD × 20 percent).

  2. The system verifies whether the rule has been broken. It has not, therefore, the final amount for wage attachment 44543 is 200 USD.

  3. Wage attachment 76658 calculates for 250 USD (1000 USD × 25 percent).

  4. The system verifies whether the rule has been broken. In this example, the rule has been broken; therefore, this wage attachment must be reduced so that the total withholdings are no more than 25 percent of disposable earnings. The final amount for wage attachment 76658 is 50 USD.

  5. Total of combined wage attachments = 250 USD

    When calculated individually, the combined total of the wage attachments is 450 USD, or 45 percent of the employee's disposable earnings. Therefore, without the rule, the employee would have paid more than the amount that is specified by the government.

    Note: This example is for illustration only. For information about rates, limits, and other regulations regarding wage attachment withholdings, contact state or federal labor authorities.