While preparing for payroll and labor law compliance in the new year, many employers have questions about voluntary and involuntary deductions, including what terms apply to court-ordered wage garnishments versus wage assignments arranged through voluntary agreements. In this article, we’ll explore the regulations that apply to pay deductions in West Virginia and how employers can remain compliant in their wage practices.
Wage Garnishments and Involuntary Deductions
Whereas a wage assignment refers to a voluntary agreement made between employer and employee, a wage garnishment results from a court order. When employers are served wage garnishment orders that apply to individual employees, the orders sometimes require withholdings in excess of the state’s normal 25% net wage threshold. In West Virginia, while a wage garnishment order is active, an employer may not establish a wage assignment agreement or withhold an existing wage assignment agreement.
Below, we’ll explore baseline employer requirements as it relates to several different forms of wage garnishment in West Virginia:
- Child Support – After receiving a wage garnishment order for child support purposes, an employer must initiate withholding no later than within the first pay period or within 14 days after receiving the garnishment order. Employers are required to remit withheld wages on the employee’s payday (usually electronically).
- Tax Levies – In some cases, an employer must withhold wages to abide by a state tax levy, which continues until the levy is released by the West Virginia state tax commissioner. A designated amount or percentage of wages are exempt from each withholding.
- Creditor Withholding – As with tax levy garnishment policy, West Virginia state law places limits on the earnings amount that is eligible for creditor garnishment per workweek. Employers are entitled to deduct an administrative fee for each payment made on the employee’s behalf.
For other types of wage garnishment in the state of West Virginia, including federally-subsidized student loans or local taxes, consult a legal expert. This is particularly important, as West Virginia state law states that failure to pay a designated creditor or authorized plan (at all, or in an untimely and inaccurate fashion) after completing a deduction is considered an illegal deduction of employee wages.
Broad Conditions for Withholding
In general, employers may withhold from an employee’s wages without written authorization from the employee as long as the withholdings are necessary, permissible or and business-related. For instance, withholding is permitted for payroll taxes, medical premiums, pension contributions, union/club dues, credit union payments, savings plans, etc. Other types of deductions are permitted by federal and state law, such as debts owed to the employer, meals, and housing and transportation (depending on the industry and arrangement).
Wage Assignments and Legal Voluntary Deductions
An employer cannot make legal employee deductions for any items that are exclusively or primarily for the benefit of the employer: uniforms to be worn only during work hours/at job sites, compensation for financial losses or damages incurred by the employer, tools used to complete work for the employer, etc.
Of course, an employer is entitled to withhold or deduct from an employee’s wage if employer-provided property is not returned (tools, for instance). In some circumstances, this withholding type does not require a wage assignment agreement and is not subject to the state standard of 75% exempted wages.
As for legal and voluntary wage assignments in West Virginia, employer withholding can not exceed 25% of an employee’s net pay. Additionally, the following terms apply:
- Any wage assignment (called “Assignment of Future Wages Form” in West Virginia) must be signed by the employee and employer, and notarized
- The Assignment of Future Wages Form must show the total amount owed
- Any wage assignment must be renewed annually, as they are valid for only one calendar year
- Deductions may vary from payday to payday, but must honor the 75% net pay exemption across the year-long span of the agreement
- Wage assignments must be fulfilled based on the order they are authorized
For more information, West Virginia’s “Assignment of Future Wages Form” is available here through the West Virginia Division of Labor website.
Simplify Garnishments and Pay Deductions
Whether your business is navigating garnishment orders or voluntary pay deductions, our Garnishment Administration Service provides the guidance and support you need to remain legally compliant. Our experts manage the calculations, setups, and deductions necessary to fulfill all state and federal requirements and complete deductions in a timely and accurate way.
Ready to streamline your garnishment and pay deduction process? Contact us today and let us know how we can help.