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Child support adds extra step when an employee is terminated

2023-03-10T06:00:00Z

According to the U.S. Department of Health & Human Services, 75 percent of child support payments are collected, or “garnished,” through child support withholding of an employee’s pay.

As an employer, you may be withholding child support from the wages of one or more employees. But what if you need to terminate one of those employees?

How wage garnishing works

Child support withholding is a court-mandated payroll deduction. If a noncustodial parent has an unpaid child support debt, a court or child support agency will send that parent’s employer an Income Withholding for Support Order (IWO).

An employer that receives a withholding notice is required to make child support deductions from the employee’s wages. Typically, an employee’s disposable income is used to determine the limits of child support deductions.

What about terminations?

An employer may not terminate an employee because of child support withholding. If an employee is terminated for reasons unrelated to child support withholding (such as a performance issue), there is an extra step that must be taken by the employer.

When an employee with a child support IWO is terminated, an employer must report the termination as soon as possible to the child support agency, court, or attorney that issued the IWO.

Why report terminations?

When such a termination is reported, the child support agency understands that the reporting employer is no longer withholding child support from the employee. Even if the employee left during the first pay period, the employer must report the termination if all the below apply:

  • An employer-employee relationship existed
  • The employee filled out a W-4 form
  • The employer submitted a new hire report for that employee
  • The employer received a withholding order for that employee

Key to remember: When terminating an employee for whom you have been ordered to garnish wages for child support, you must take the extra step of notifying the child support agency that ordered the garnishment.