May an employee whose wages are garnished be fired because of the garnishment?

Under federal law, an employer may not discharge an employee due to an involuntary wage deduction or garnishment for any one indebtedness. One indebtedness means one garnishment proceeding, no matter how many debts were satisfied by that proceeding. It can also mean a single debt, regardless of the number of claims made against that debt. In addition, many states prohibit discharge because of garnishment, regardless of the number of garnishments involved. Some states go further and prohibit the use of disciplinary action against an employee due to a garnishment. The one indebtedness rule applies to several types of wage deductions, including:

• Tax levies;

• Support orders;

• Garnishments;

• First-time garnishment orders under Chapter 13 of the Bankruptcy Code; and

• Wage assignments that have been subsequently enforced with a court-ordered garnishment.

Generally, the following situations will constitute one indebtedness for which the employee may not be terminated:

• A single garnishment proceeding for multiple debts-i.e., multiple creditors joined together to collect all their debts in one garnishment proceeding;

• Multiple garnishment proceedings for a single debt-i.e., multiple attempts were made to collect on a single debt;

• An employer receives a second garnishment order for a different debt, but cannot withhold for that garnishment because the maximum amount is already being withheld for the first garnishment;

• An employer receives notice of more than one garnishment against one employee, but the employee promptly obtains releases on all but one of the garnishments;

• An employer receives a second garnishment more than one year after receiving the first garnishment; and

• An employee changes jobs and the new employer receives a second garnishment. Employers that violate the one indebtedness rule are subject to a fine of up to $1,000 or up to one year of imprisonment.

Child support exception. A continuing order for child support is not considered one debt by the Wage and Hour division. Therefore, if an employee's wages are garnished for failure to pay support during a monthly period and then several months later another garnishment is obtained by the employee's ex-spouse for a similar failure to pay, the second or subsequent order is considered a separate indebtedness.

If the prohibition is against discharging an employee for one indebtedness, may your organization fire an employee when a second garnishment order arrives? It depends on how soon the second order follows the first. A lapse of time may be great enough so that the subsequent garnishment is no longer a material consideration in the employee's discharge. In addition, with each new employment, the employee's "slate is wiped clean" for multiple garnishment purposes.

The best policy, then, is to treat each employee and each case separately. Determine whether there is a pattern of garnishments that is predictable. How long it has been since an earlier garnishment and the actual inconvenience to your organization if the employee is retained despite a third garnishment or more.

Some states have also enacted specific rules regarding the discrimination against employees whose wages have been garnished. For state-specific information, see State Laws.