Can I Terminate Employees Who Have Wage Withholding Orders?

You AskedNo.

Processing a single garnishment is not a major issue for most employers. But when you add together multiple garnishments, child support orders, and tax levies, processing payroll can become a nightmare. Since Colorado is an “at-will” state, why not send the employee packing and solve the problem once and for all?

Resist the temptation.   

The federal Consumer Credit Protection Act provides that “[n]o employer may discharge any employee by reason of the fact that his earnings have been subjected to garnishment for any one indebtedness.”

This language seems consistent with terminating the serial offender. However, Colorado law addresses the topic separately: “No employer shall discharge an employee for the reason that a creditor of the employee has subjected or attempted to subject unpaid earnings of the employee to any garnishment or like proceeding directed to the employer for the purpose of paying any judgment.”

Most states have similar provisions. For example in Arizona, “Any employer or other payor shall not refuse to hire a person and shall not discharge or otherwise discipline an obligor because of service of an order of assignment.” In Montana, “No employer shall discharge or lay off an employee because of attachment or garnishment served on the employer against the wages of the employee.” And in Wyoming, “No employer shall discharge an employee for the reason that a creditor of the employee has subjected or attempted to subject unpaid earnings of the employee to any continuing garnishment … .” Not surprisingly, California also provides protection against discharge in these circumstances. Note that most states provide for penalties against the employer, which can include back wages and reinstatement.

MSEC employs subject matter experts on virtually every employment law topic, and garnishments are no exception. If you have questions about your state’s laws or just need help establishing priority for a handful of income assignments, give us a call.