Complying With Wage Garnishments in Texas—What You Need to Know

When you have tens of thousands of employees, it is very likely that your payroll and human resources (HR) departments receive wage garnishment orders for employees every week. Texas law is restrictive in this area, and it is important that HR and payroll employees know which types of wage garnishment orders an employer must follow.

Which Garnishment Orders Must Texas Employers Follow?

The Texas Constitution, in Article 16, section 28, specifically prohibits an employer from garnishing a Texas employee’s wages except for court-ordered child support or spousal support payments. A Texas employer must also comply with tax levies executed by the Internal Revenue Service (IRS), garnishment orders for federally guaranteed student loans, and garnishment orders for federal debts that fall under the federal Debt Collection Improvement Act (DCIA). This is because each of the statutes under which these orders and levies are issued expressly supersede state law. Thus, in general, Texas employers must comply with garnishment orders for federal debts or child support or alimony orders but not garnishment orders that involve creditor debts. In fact, employees may sue their employers for wrongful garnishment if they comply with garnishment orders involving creditor debts.

Which Garnishment Orders Must Multi-State Texas Employers Follow?

What about Texas employers that have multi-state operations? The employer may be required to comply with other types of creditor garnishments on the wages of their Texas employees under the “full faith and credit doctrine” of Article IV of the U.S. Constitution, which requires each state to honor “the public acts, records, and judicial proceedings of every other state.”  The situation may occur when a Texas employer (1) has facilities in other states and (2) is subject to the jurisdiction of the state that issued the wage garnishment.

One of the only cases to deal with the issue of how Texas employers should handle out-of-state wage garnishments is Knighton v. IBM Corp, 856 S.W.2d 206 (Tex. App.—Houston [1^st Dist. 1993], writ denied). The Knighton case involved an IBM employee who was required to pay alimony to his wife under a Florida divorce decree. IBM later transferred the employee to Texas where he stopped making alimony payments. The Florida court that had entered the divorce decree then entered a wage garnishment order requiring IBM to pay the employee’s ex-wife the alimony amount from the employee’s salary and retirement fund.

The employee did not contest the Florida order but rather filed suit in a Texas state court arguing that the out-of-state judgment could be enforced only through Texas collection procedures. At the time, Texas laws did not permit employees’ wages to be garnished for alimony. The court held that the garnishment order was enforceable, explaining that “[a] state cannot deny full faith and credit to another state’s judgment solely on the ground that it offends the public policy of the state where it is sought to be enforced.” Most legal commentators have interpreted the reasoning in this decision to encompass other types of garnishments, including creditor garnishments.

Four Steps Employers Can Take To Handle Garnishments

When faced with one or multiple wage garnishment orders for one employee, an employer should consider taking the following actions:

1. Determine whether the employee is currently working for the employer.
2. Review each order to determine which is allowed under Texas law. For example, if the employer is based solely in Texas and receives a child support order from the Texas Attorney General, a wage garnishment for a federal debt from the U.S. Treasury, and a creditor wage garnishment from Illinois (where the employer does not have facilities), the employer will be required to comply only with the first two orders.
3. Track which wage garnishment order was received first. The general rule is that an employer should garnish wages chronologically according to when the garnishment order was received. A garnishment received first should be handled before each subsequent order, as long as doing so does not violate the statutorily provided garnishment amount. For example, for federal debts, an employer may garnish only up to 15 percent of the employee’s salary, and a garnishment for a federal debt may not bring the employee’s salary below minimum wage. The federal DCIA, however, states that employers must comply with family or child support orders before complying with DCIA orders—even if the DCIA order was received first.
4. Employers that do not have to comply with the garnishment order should not file a formal answer with the court that issued the garnishment. Instead, the employer may wish to call the attorney who filed the wage garnishment to discuss Texas law on the issue. Most attorneys will then withdraw the garnishment order against the employer.