When a state court issues a wage garnishment order against a person required to provide child support, it automatically triggers a set of actions that have to be completed in order to ensure compliance with the order. But like most things involving the government, the requirements of each of the parties involved are rather confusing. The Office of Child Support Enforcement (OCSE) has made an attempt to clarify some of the most complicated issues with guidance released in mid-March (2018).
Bloomberg's Bureau of National Affairs published a piece on March 16 that sought to break down the new guidance into smaller, more easily understood chunks. This post will attempt to do the same. Please note that if you have questions about how child-support affects your company payroll, it is your responsibility to find those answers – especially if you are under a court order to withhold from an employee's pay in order to make child-support payments.
Employment Verification Requests
The first point of guidance addressed verification of employment requests sent by state agencies to employers. Because states are expected to administer child-support compliance orders, they need to know certain employee information in order to know when to modify such orders. The only mechanism for collecting this information is the employment verification request sent to employers.
Some employers have a habit of passing these requests on to third-parties, like payroll providers. This presents a couple of problems. First, the OCSE says that some of these third parties are charging state agencies fees for completing and returning the requests. The states are often unwilling to pay said fees.
Second, it is ultimately the employer's responsibility to provide the requested information. Should there ever be need for litigation, the court will hold the employer liable rather than the third-party. As such, the OCSE recommends not passing verification requests on to third parties. Employers should complete and submit them themselves.
New-Hire and Multi-State Reporting
The second point of guidance covers how employers report new hires. For the purposes of the guidance, people rehired within 20 days are treated the same way. OCSE recommends against using two different EINs for reporting new hires. Employers should use the same EIN to report a new or rehire and to file quarterly wage reports. Using the same number makes it easier for states to enforce compliance. It also prevents duplicate information from appearing in the National Directory of New Hires.
In terms of multi-state reporting, employers are required to follow a new reporting process. They now must register with the OCSE to let them know if they are reporting all their employees in only one state despite having multi-state operations. They must also list the reporting state in their registration.
Responsibility for Withholding Limits
Finally, a number of states have been leaving it to employers to determine how much to withhold for child-support. The OCSE says that the practice is no longer acceptable. When state agencies furnish forms to employers, they must now specify the withholding limit. Withholding limits are as follows:
- An employee supporting a second family with no overdue amounts – 50%
- An employee supporting a second family with payments overdue by at least 12 weeks – 55%
- An employee not supporting a second family with no overdue amounts – 60%
- An employee not supporting a second family with payments overdue by at least 12 weeks – 65%.
Withholding for child-support payments adds yet another layer of complexity to payroll processing. If your company is struggling to keep payroll under control, it might be time to think about working with BenefitMall.
Bloomberg BNA – https://www.bna.com/childsupport-office-improves-b57982089964/