How Are Child Support Orders Handled?

Who administers support withholding orders? Withholding for child support must be administered by a public agency designated by the state. Amounts withheld must be promptly distributed by the state or the state agency under procedures adequate to document payments of support and to track and monitor those payments. However, the state may establish or permit the establishment of alternative procedures for the collection and distribution of child support under the supervision of a public agency by other than a public agency so long as the entity making the collection and distribution is publicly accountable for its actions and so long as the established procedures assure prompt distribution and provide for the keeping of adequate records to document payments of support and to permit the tracking and monitoring of support payments.

Any state may establish procedures under which support payments will be made through the agency that administers its income tax withholding system if the absent parent or the custodial parent requests it, even though no arrearages in child support payments are involved and no income withholding procedures have been instituted. In any such case, an annual fee for handling and processing must be imposed on the requesting parent by the state. The annual fee may not exceed the actual cost incurred by the state or $25, whichever is less.

Is there a limit to the amount that may be withheld? The Consumer Credit Protection Act provides that an employer may be required to withhold up to 60% of disposable earnings in order to satisfy a child support order. That amount is reduced to 50% in the case of an employee who is supporting another child or spouse. However, those percentages are increased, to 65% and 55% respectively, if the employee has owed unpaid child support for more than 12 weeks.

Note that individual states may lower the limit on the amount that may be withheld, but cannot go higher than the limits set by federal law. Employers must compare the federal and state limits and use the one that most favors the employee.

Determining disposable earnings. The amount exempt from deduction for a child support order must be calculated using the employee's "disposable" earnings. Disposable earnings are earnings that remain after deductions that are required by law.

Example : Luke, a single employee with one child, receives $200 in disposable earnings each week from his employer. Luke has no current involuntary deductions from pay. Luke's employer receives a child support order requiring it to withhold $50 per week from Luke's disposable earnings. Luke's state follows the federal limits for child support withholding. Thus, Luke's employer may withhold up to $120 per week ($200 X 60%) in order to satisfy the child support order.

Complying with child support orders. Employers should keep certain guidelines in mind when processing such orders.

Must voluntary withholding for child support be permitted? Your organization is encouraged to cooperate with parents who are not ordered to pay child support through employer withholding but who choose to do so. Federal law does not address voluntary withholding for child support; however, under state law, voluntary withholding is called a wage assignment.

Understanding the order to withhold. Employers will receive an order that sets forth their wage withholding obligations with respect to a particular employee. The federal Office of Child Support Enforcement (OCSE) (part of the U.S. Department of Health and Human Services) has developed a standardized order/notice form that will be used in many instances to notify employers of their interstate withholding obligations. Key elements of most wage withholding order forms include:

• Name of employee whose wages are to be withheld;
• The amount to be withheld;
• When withholding must begin; and
• When withholding must be forwarded to the party designated in the order.

Child support orders may be either public or private orders, based upon whether they are administered by a public agency or not. Public orders are frequently called "IV-D Orders" and are child support orders issued with respect to children whose custodial parents receive some form of public assistance. These orders are typically administered by a state public aid agency. All other orders are private orders and may be administered by a court or a public agency.

Combining payments from more than one employee. Employers that are remitting child support withholding amounts from more than one employee to the same agency may submit a single payment to the agency, but must list individually the names of the employees whose wages are being withheld, along with the date the wages were withheld.

Pay cycles need not be changed. Although support orders may indicate that support payments must be deducted on a weekly basis, employers are not required to vary their pay cycles in order to comply with a support order. The order should contain instructions for converting the amount to be withheld for use in a biweekly, semimonthly or monthly pay cycle.

Electronic deposits acceptable. Employers may use electronic funds transfer/electronic data interchange technology to transmit wage withholdings, where the technology is available.

Deducting the employer's fee. Employers may be permitted to charge the employee a fee to help recover the cost of processing the order. The amount of the fee is governed by state law. The fee is an additional amount to be deducted from the employee's wages --it should not be deducted from the child support payment.

What if the employee quits? If an employee whose wages are being deducted to satisfy a child support order quits, the employer must promptly notify the agency where payments are being sent. The notification should include the employee's last known home address, and the name and address of a new employer, if known.

What should you do if an employee says a deduction is incorrect? The employee must contest the perceived error with the withholding agency, not the employer. Until your organization is notified otherwise by the withholding agency, it should proceed with the withholding as ordered.

When to send payments. Under federal law, employers must pay withheld amounts to the applicable state agency within seven business days after withholding the amounts from the employee. Note that individual states may require payment in a shorter period of time.

Where to send payments. States are required to have in place a central disbursement unit to collect all child support payments withheld by employers. Once the disbursement unit has received the payments, it in turn has two business days to forward the payment to the custodial parent or appropriate state agency.

Penalties. Employers that fail to withhold child support as ordered will be liable for the amount of child support that is not withheld. In addition, employers may be subject to penalties for failure to withhold child support or to pay it to the state disbursement unit.

State child support order requirements. State child support requirements govern employer responsibilities including the following areas:

When withholding must begin. State law governs when an employer must begin to comply with the terms of a child support order.

Due date for payment of withheld amounts. Employers must pay over to the appropriate party withheld child support amounts within a certain time frame.

Fees. Employers in many states may charge a fee for the processing of child support orders.

Agency contact. Each state government contains a division that handles child support enforcement issues for that state.

What discrimination provisions govern child support withholding? Federal law prohibits employers from refusing to hire, discharging or discriminating against any employee because the employee's wages have been garnished for any one debt. Some jurisdictions permit discharges if there is more than a specified number of garnishments for separate debts.

What if an employer fails to follow a support withholding order? Under federal law, if your organization fails to withhold child support as specified in a withholding notice, it is liable for the full amount it should have withheld from the employee's wages. Some jurisdictions provide additional penalties for noncompliance. Be sure to check State Laws for details of specific state provisions.