Before you are hired as an employee, most companies complete a background and credit report check. This is to minimize hiring a person with the potential to be a detriment or legal liability to the firm. Companies want to hire a qualified person who can do the job on a long-term basis with minimal problems.
Unless you have an employee contract, having a job is an at-will situation. That means that an employee that causes any problems for the firm can suffer a termination of employment. High on the list of job termination reasons is an employee’s serious personal debt that causes wage garnishments.
A wage garnishment happens when a person owes a substantial amount of money to a company, college, a state or federal agency, or debt collection agency. Once the debtor determines that you are unwilling to pay back money owed, it will petition a court to have its funds taken directly from the employee’s payroll check each pay period. Eligible wage garnishments include salaries, hourly wages, commisions, bonuses, pensions and retirement income. Student loans, child support and alimony arrears are included in wage garnishment.
Everyone has financial problems at one or more times in life. If unemployed for an extended amount of time, your credit report could show your outstanding unpaid debts. A company may hire you despite the debts, anticipating that once employed, you will address your delinquent balances. Still, companies are reluctant to hold on to an employee with more than one wage garnishment.
Companies do not want to become a part of an employee’s personal financial business. They don’t want to write a check to you and your debtor every pay period. There is extra paperwork involved in holding back a portion of the employee’s check to pay a debtor. Imagine the dilemma of a company that has to withhold a portion of payroll funds and pay debtors for more than five employees each week.
The Federal Wage Garnishment Law in the Consumer Credit Protection Act protects employees from being terminated over a single wage garnishment. However, if an employee has more than one garnishment, an employer can rightfully fire the employee.
Here are some tips that could help you avoid a wage garnishment termination:
· Do not ignore court lawsuit summons concerning your debts. Failure to appear in court could allow the company suing you to a wage garnishment by default
· Especially if you were unemployed for an extended time, make written payment arrangements with your debtors soon after re-employment. Make sure you make all payments on time every month
· Companies do not like to be blind-sided. Tell your employer about a potential wage garnishment that may come into the office.
· If you are seriously trying to clear your debt, talk to your supervisor. Explain that your extended unemployment caused the problem (if that is true), and that you are working to address your debt situation.
The Wage and Hour Division of the Department of Labor can answer any questions you may have if you believe you have been unjustly fired due to a wage garnishment. Taking pre-emptive action to avoid it should be treated as a high priority.