Garnishment Administration Best Practices. Carolinas Payroll Conference Amorette Nelson Bryant (Amy) November, 2014

Transcription

1 Garnishment Administration Best Practices Carolinas Payroll Conference Amorette Nelson Bryant (Amy) November, 2014

2 Focus End to end process for handling wage attachments Identify receipt location Tracking documents/correspondence Initial document review Document entry/audit/review Outputs Scheduling and Timelines Staffing considerations

3 Control Document Delivery Creditor Garnishment Provide Secretary of State address where legal documents must be delivered Engage a Registered Agent in each state where doing business Request electronic delivery Record legal document delivery address with Sec of State Refuse delivery if not in compliance with state law Provide service address to process server

4 Control Document Delivery Support Enroll in IWO program (32 states) Identify delivery address with new hire reporting registration Register 3 rd party in states when required Texas identifies requirements in employer handbook Notify state agency if IWO s are sent to wrong address Staff might use information other provide instead of checking records

5 Control Document Delivery IRS Levy Send letter, to regional IRS offices with mailing correct address Use stationary with company letterhead

6 Control Document Delivery Ongoing Update address when changed Update address and company name with acquisition Notify of divesture of subsidiaries Refuse new creditor garnishments if garnishee name is incorrect Current garnishee name should be used

7 Control Document Delivery Internal Train mailroom personnel Types of garnishments received Document names For payroll or another department? Non-wage garnishment - AP National Medical Support Notice - HR Plaintiff is the company - Legal Use distinctive envelopes/bins for interdepartmental garnishment mail

8 Receipt of Documents Paper Is this a document the garnishment department handles? No, return to mailroom, correct department, or sender as applicable Yes, go to next step

9 Record Documents Received Paper Record document in log Log refers to method used to record and track documents Primary purposes are: Record all documents received Track critical steps from receipt to set up Verify the attachment is processed on time

10 Receipt of Documents Paper Upon receipt record: Date, received, defendant name, defendant identifier, garn type, issuing party, case ID Date is the date received at point of entry Branch office, Registered agent Record completion of steps during garnishment processing

11 Receipt of Documents Paper Defendant terminated/never employed No, check with other payers e.g. AP, pension, retirement account Yes, forward to other payer Record in log the date forwarded/where sent Note: when company is a financial institution certain types of support orders, creditor garnishment or tax debts may require withholding from an account

12 Receipt of Documents Paper Defendant terminated/never employed No and is not paid by another department No, complete the interrogatory, answer, or acknowledgement and return to sender All new or modified wage attachments documents require a response if defendant is terminated or never employed Use letter to answer questions, when document is not provided Record date returned to sender

13 Receipt of Documents Electronic Defendant terminated/never employed No and is not paid by another department E-IWO member complete acknowledgement form and send thru portal 42 states accept e-iwo terminations E-Term member complete form and send thru OCSE portal Some courts in several states require response for creditor garnishment be sent electronically

14 Receipt of Documents for Employee Review documents to determine: If the service includes all required items? Is the garnishment a proper document? Is the document called something else, but really qualifies as a Garnishment? Income Execution, Trustee Agreement? Is the employer s correct legal name identified as the garnishee? If employee works in a different state than the state where a creditor garnishment is issued, is garnishee name the same?

15 Receipt of Documents Paper Is there sufficient information: complete name, portion of SSN, age, home address to identify the defendant? If child support, is the original or amended IWO issued using the federal required form? Accept both 2011 and 2014 form until 7/31/15 If a 3 rd person or attorney issued the IWO is the court order attached? If child support/family support, is the payment directed to the SDU?

16 Receipt of Documents Paper If support order is for spousal support only is the correct form use? If a voluntary form 2159 is delivered, is the document complete and approved by the IRS? If a Demand Notice for a voluntary wage assignment is delivered, was the Notice of Intent delivered 20 days prior? (Illinois) If a voluntary wage assignment is delivered, does it meet the requirements of the state where the employee works?

17 Review Following Acceptance of Attachment Do documents require special handling? Are there documents that must be sent to the employee? Are there documents that must be completed and immediately returned to the attorney and or court? Some states require immediate response to confirm the defendant is an employee and is due earnings.

18 Review Following Acceptance of Attachment Once documents are accepted are there situations that may affect withholding? Has the employee filed for bankruptcy or have a Ch13 repayment plan? Does the employee work in the state that issued the creditor garnishment, support order, state tax levy, state non tax debt or voluntary assignment?

19 Review Following Acceptance of Attachment When the live and work states differ: What administrative laws must be followed? What withholding laws must be followed? If another attachment is in place, which attachment has priority? If the employee receives a 2nd creditor garnishment or state tax levy does the state allow aggregation of the state/federal limit or allow only one attachment be deducted at the same time?

20 Required Information Each type of wage attachment must follow specific laws/rules and may be unique to that attachment e.g. IRS levy The answers to the questions asked in preceding slides are found in federal and/or state laws Only federal laws apply to: IRS tax levies Chapter 13 repayment agreements Federal administrative wage garnishments Student loans issued by guaranty agencies

21 Required Information State and federal laws apply to: Child support Family support Spousal support (alimony, maintenance) Creditor garnishment State non tax debts Voluntary wage assignments State laws apply to: State tax levy

22 Requirements Documentation Each type of wage attachment requires separate documentation Documentation includes spreadsheet and narrative instructions A document for support would include requirements that apply to all support orders plus requirements unique to each state

23 Requirements Documentation Federal law/rules only Document for federal law by type of attachment State law/rules only Document for laws of each state where you do business Federal and state law/rules Document for federal law for type of attachment Document for laws of each state where you do business by type of attachment

24 Requirements Documentation Documentation/procedures must be updated when a federal or a state law (in the states where persons are employed) changes Review at a minimum once a year to ensure all changes were made Person signing off should have some understanding of the process

25 What Does the Employer Need to Know? (Federal) Using creditor garnishment as an example the employer must know Federal CCPA definition of: Earnings Deductions required by law Disposable earnings Withholding limit Aggregated withholding limit

26 What Does the Employer Need to Know? (State) Creditor garnishment state where employees work: State requirements for: Employer documents Employee documents/deadline for delivery Answer/Interrogatory requirements e.g. date(s) due, notary requirement, send to whom

27 What Does the Employer Need to Know? (State) State requirements for: When to begin withholding Priority of garnishment Exceptions to federal disposable earnings State statutory exemption e.g. 40 * SMW Withholding Limit/aggregation limit Employer fee

28 What Does the Employer Need to Know? (State) State requirements for: When to send money/attachments if required When to stop withholding Expiration, balance collected in full Employee termination notification Employee return to work requirement Additional information comments Sample spreadsheet provided in materials folder

29 Vender (Payee) Is the vendor set up and active? Is the vendor address up to date? If the same vendor name is used for multiple sites such as IRS, is the address set up? Does your company require a W-9 from attorney s collecting debts? Are payments made by EFT rather than by mail? Must EFT payments be identified during data entry?

30 Vender (Payee) Is there a procedure to request a new vendor code? Does another department set up the vendor code to reduce fraud? How long does it take to set up a new vendor code? If the garnishment cannot be entered because the vendor code is required, may a dummy code be used? If a dummy code is used, are procedures in place to ensure payment is made on time?

31 Software Requirements to Support Data Entry Software systems differ on how data must be entered to obtain the required outcome Software configuration and requirements must be understood as well as garnishment laws Some systems use rule codes Instead of entering the withholding limit for support, a rule that corresponds to the limit must be selected Some software programs are configured so that the exempt amount must be entered instead of the withholding limit

32 Data Entry Documents should be entered within one to two days or receipt Following are examples of special requirements to consider Use start date to control future deduction California 1st PP that ends 10 days following receipt Enter expiration requirement if applicable Use priority to control which attachments to withhold first Adjust priority of attachments in place if necessary

33 Data Entry Flag to suspend amount deducted if cannot be sent until a future date or event

34 Data Entry Audit Data entered should be received before payroll cutoff Data for new or modified cases should be reviewed by a second person to confirm accuracy Corrections should be made when error is identified If unable to make correction before payroll cutoff, make correction between program calc and final run

35 Processing Audit After payroll is calculated, all attachments entered should be reviewed to determine: Attachments that were released did not deduct Multiple garnishments withheld in correct order If garnishment deduction amount must be entered manually Some states require if garnishment was received within x days of payday, it must be withheld

36 Processing Audit After payroll is calculated, all attachments entered should be reviewed to determine: If an employee changed work states were the appropriate state rules updated If results of system quirks must be fixed PeopleSoft has a situation: when an employee transfers to a different company, the garnishment deduction does not move with the record and must be re-entered

37 Audit/Review Reports Special reports or queries are helpful in identifying common errors SUI code state is the same as the rule state for attachments using state law All support orders for an employee use the same limit code Priority code incorrect States that require a percent of gross should be reviewed to make sure disposable or net disposable was not selected

38 Supplemental Payroll Supplemental checks should be reviewed to make sure correct amount is deducted if must be aggregated Attachments for fixed amount are generally okay unless full amount was not deducted on regular check IRS Levies, not entitled to exemption if receive on regular payroll Creditor, student loan, fed admin wage garnishment not entitled to the statutory exemption if met on regular payroll

39 Output Interrogatories Each state has different requirements for interrogatories for creditor garnishments, tax levies and state non tax debts Requirements include when an interrogatory must be sent Immediately Is debtor employed? Before deduction takes place general idea of earnings After the deduction taken amount deducted Some states require an interrogatory be sent each pay period

40 Output Interrogatories Some states require an interrogatory be sent identifying this the last deduction Some states require an interrogatory be notarized o Must send original signature, not a copy A few counties or courts within the state require electronic answers Iowa, Michigan

41 Output Interrogatories IRS levy 668W requires the employer complete the back side of Part 3 and return with the first deduction If money is not withheld for the levy, Part 3 must be completed and include an explanation as to why there is no deduction Student loans and federal administrative wage garnishments require an answer be sent

42 Output Checks Several states require deductions, for creditor garnishments, be held for a specific number of days or receipt of another document Some states require an interrogatory, for a creditor garnishment, be sent with the check

43 Output Checks Each type of wage attachment has its own requirement as to when payment must be sent Child support federal law is no later than 7 business days of pay date Child support each state has its own law e.g. Texas is same day as pay date State laws differ as to when deductions must be sent for creditor debt, tax levies and non-tax debts

44 Output Checks IRS requires payment be sent same day as pay date Student loans from guaranty agencies should be send the same day as pay date Federal administrative wage garnishments must be sent at least once a month

45 Output Electronic Payments 16 states require electronic payments for support state thresholds are met Minnesota passed a state law requiring tax levies be paid electronically, however there are difficulties with their system A committee has been formed to look into standardization of electronic payments for tax levies to all states Federal government has no plans for levies or non-tax debts

46 Returned Checks When checks are returned, the reason for return must be investigated immediately and appropriate action taken The most common reason for a check to be returned are: Payee address is incorrect Payee cannot identify the payment Case is closed Payment was sent earlier than it should have been sent

47 Follow up Situations that may prevent immediate set up must be monitored to ensure the issue/problem is resolved by payroll close or at the latest before final payroll run Necessary actions such as completing an interrogatory should be monitored using a tracking other than monitoring deductions taken

48 Prioritizing Data Entry What if all the wage attachments received cannot be entered before payroll close? Prioritize by legal deadlines Enter releases Enter reductions Chose documents that can be entered quickly Identify any misses and schedule to handle before final payroll run

49 Timeline/Calendar Prepare an annual calendar and populate all known dates which limit or prevent activities Continue to add as information becomes available Specific days and or times when system cannot be updated Specific days or times when system cannot be viewed Holidays or other non work days Employee scheduled time off

50 Timeline/Calendar Coordinate with other departments to identify special events Bonus payments may result in lump sum reporting requirements and withholding support from bonus checks Annual health plan enrollment may affect changes to deductions required for some disposable earnings calculations Software updates so testing is conducted

51 Timeline/Calendar Identify all regular pay cycles Identify payroll cut off Identify when supplemental cycle(s) run Identify when system is available for correction/additions before pay run Adjust for holidays that affect payroll close, pay run, pay date

52 Timeline/Calendar Identify date(s) a significant task must be completed Work backwards to fill in dates when sub tasks must be completed Adjust staff schedules to ensure each sub task and significant task can be completed and are completed in sequential order Use a checklist to verify all pay period tasks were completed, before payroll cutoff

53 Timeline/Calendar Weekly payrolls are most time intensive Example: Friday is pay period end; data entry must be completed; many payee checks and interrogatories for previous pay period must be completed and mailed by COB Friday while others may be handled on following Monday Biweekly and Semi monthly payrolls reduce the number of critical tasks that must be performed on the same day

54 Staffing There is no magic number for staffing the garnishment department Take into consideration: Total number of active documents Weekly average of documents received States where employees work Texas employers have no creditor garnishments or tax levies Arizona, Colorado, Ohio creditor garnishment requirements are very time intensive

55 Staffing The fewer wage attachments that are administered require a proportionately greater number of staff to handle 500 garnishments 1.5 FTE 2,500 garnishments 2 to 2.5 FTE 5,000 garnishments 3 to 3.5 FTE At least 2 persons must know all the activities involved to fill in if primary person is absent, or requires assistance

56 Staffing Manual handling requires more time E-IWO reduces work load for child support and subsequent reporting data to participating states Be creative with schedules If the heaviest work load is on Thursday and Friday, create a 4 day schedule of two 8 hour days and two 12 hour shifts

57 Summary Administering garnishments is the most difficult job in the payroll department Job grade should reflect the complexity Budget for periodic training Failure to handle time sensitive garnishments can be costly Failure to audit or review reports can be costly Creditors do not make allowances for employer internal issues

58 Summary Refer to materials folder for: Sample spreadsheet for creditor garnishment to record state requirements Links to Office of Child Support Enforcement materials for employers Links to other helpful sites

59 Speaker Disclaimer The topics covered in this presentation touch on significant activities a garnishment department will handle but are not all inclusive Recommendations are based on years of exposure to various corporate garnishment departments but as every company is different it is prudent for the audience to pick and choose or add what they feel best covers their situation Ms. Bryant is not an attorney and is not attempting to practice laws and recommends involving your legal representative when making critical decisions

60 Speaker Information Amorette Bryant (Amy) is recognized by the payroll industry as an expert in the area of wage garnishment. She is a member of and previous chair of the APA GRTF for Child Support and Non Support Garnishments. She was an advisor to the Uniform Law Commission in 1996 regarding employer needs that were adopted in the Uniform Interstate Family Support Act. Currently she is an observer to the ULC Wage Garnishment group. Her book was used as the primary source of information to document garnishment variables from state to state Amy is a consultant, author and speaker. She is the author of the Complete Guide to Federal and State Garnishment, 2015 Edition, Aspen Publishers. She is also a contributing author to other Aspen Publications. She may be contacted at [email protected]