Garnishment Routine 2 (GAR2)

Garnishment Routine 2 ensures that not more than the Garnishment Limit of an employee’s Net Disposable Income (NDI) for garnishment deductions should include Child Support deductions established using the CSUP or CACS special routine is taken per pay period for the employee. NDI is defined by deducting mandatory deductions such as Federal Tax, State Tax, Health Insurance Tax (HIT), and Employee Retirement Contributions from gross earnings.

The GAR2 special routine processes multiple garnishments based on the Deduction Processing Order Number specified at the Type level. If more than one garnishment has the same Deduction Processing Order Number specified at the Type level, the deduction with the earliest effective date will be processed first. If more than one has the same effective start date, the process will then look up to the Deduction Type code and process by codes using numbers first then those using alpha characters.

Federal Garnishment Law states the following:

On a weekly basis, the garnishment cannot exceed the lesser of the following:

  • 25% of employee's NDI

  • Amount by which employees NDI exceeds 30 times the hourly minimum wage

Garnishment Routine 2 is applicable to states utilizing the Federal Garnishment laws or states that use a variation of those laws. Note: While the GAR2 routine is applicable for many states, it is not intended to cover garnishment laws for all states.

For example, a state with the below garnishment law could use GAR2 for garnishment processing:

On a weekly basis, the garnishment cannot exceed the lesser of the following:

  • 20% of employee's NDI

  • 40% of the Amount by which employees NDI exceeds 40 times the hourly minimum wage

The GAR2 special routine first ensures that a garnishment deduction is not taken if the employee’s NDI is equal to or less than the minimum garnishment amount. The garnishment minimum amounts are stored for each pay frequency in the Special Routine Amount/Percent fields on the Deduction Plan (DPLN) page as follows:

  • Amount/Percent 1 is the weekly pay frequency garnishment minimum amount.

  • Amount/Percent 2 is the bi-weekly pay frequency garnishment minimum amount.

  • Amount/Percent 3 is the semi-monthly pay frequency garnishment minimum amount.

  • Amount/Percent 4 is the monthly pay frequency garnishment minimum amount.

  • Amount/Percent 5 is the annual pay frequency garnishment minimum amount.

The pay frequency amounts can be determined by the following, these amounts are also used in calculation 2 as described further below:

  • Amount/Percent 1: 7.25 (minimum wage) * 30 (hrs) * 1 (weeks in pay period) = 217.50

  • Amount/Percent 2: 7.25 (minimum wage) * 30 (hrs) * 2 (weeks in pay period) = 435.00

  • Amount/Percent 3: 7.25 (minimum wage) * 30 (hrs) * 2.16667 (weeks in pay period) = 471.25

  • Amount/Percent 4: 7.25 (minimum wage) * 30 (hrs) * 4.333 (weeks in pay period) = 942.50

  • Amount/Percent 5: 7.25 (minimum wage) * 30 (hrs) * 52 (weeks in pay period) = 11310

Note: These numbers are based on the Federal garnishment law, but numbers for State garnishment laws can be used as well.

If the employee’s NDI is greater than the garnishment minimum amount, the following calculations are performed to determine the garnishment limit for the deduction:

  • Calculation 1: The employee’s NDI will be multiplied by the multiplier defined on Amount/Percent 6 on the Deduction Plan for the garnishment.

  • Calculation 2: The minimum garnishment amount will be deducted from the employee’s NDI and multiplied by the multiplier value found within Amount/Percent 7 on Deduction Plan if the value is an amount other than 0/null. If the value in Amount/Percent 7 is 0/null, then the calculation will not consider Amount/Percent 7.

Amount/Percent 9 on Deduction Plan is used to indicate which calculations the garnishment will consider when determining the Garnishment Limit. Amount/Percent 9 can be 0,1 or 2:

  • 0 - Calculation 1 and Calculation 2 are considered for determining the Garnishment Limit.

  • 1 - Only Calculation 1 is considered for determining the Garnishment Limit.

  • 2 - Only Calculation 2 is considered for determining the Garnishment Limit.

If A/P 9 is 0, Garnishment Limit is the lesser of the two calculations. The total of deductions where special routine is Child Support or California Child Support and Garnishment Routine 2 cannot be more than the Federal Limit. Each garnishment deduction will consider its own garnishment limit when processing. Note: It is assumed that all Child Support deductions will have a lower Deduction ProcessingOrder Number and be processed before Garnishment Routine 2 deductions.

Each Garnishment Routine 2 deduction with the Amount/Percent 8 field populated will be assessed an Enforcement Fee. The garnishment amount minus the enforcement fee identified by the Amount/Percent 8 field is contributed to the deduction goal amount while both the garnishment amount, contributed to the goal, and enforcement fee is sent to the designated office. If the deduction amount is equal to or less than the amount entered in the Amount/Percent 8 field, then an enforcement fee will not be processed.

Garnishments with the Use with Primary Deduction field checked generate an administrative fee using the deduction details within the Secondary Deduction Type and Secondary Deduction Plan fields on the Deduction Plan table. If a garnishment with an administrative fee is backout/suspended due to the negative net pay amount or due to Federal Limit being exceeded, then the administrative fee will be backed out.

The Garnishment amount can be rate or amount based and may be overridden on the Garnishment transaction. If a deduction is rate based, the NDI will be multiplied by the rate to determine the garnishment amount.

Note: This functionality is only available when utilizing the Next Generation Payroll service.

GAR2 Routine Example:

Deduction Plan:

  • Deduction Type: GARN1

  • Deduction Plan: GARN1

  • Special Routine ID: Garnishment Routine 2

  • Amount/Percent 1: 217.50

  • Amount/Percent 2: 435

  • Amount/Percent 3: 471.25

  • Amount/Percent 4: 942.50

  • Amount/Percent 5: 11310

  • Amount/Percent 6: 0.25

  • Amount/Percent 7: 0 (Not considered by calculation 2 since it is 0)

  • Amount/Percent 8: 10

  • Amount/Percent 9: 0

  • Secondary Deduction Type/Plan: GNADN

 

  • Deduction Type: GARN2

  • Deduction Plan: GARN2

  • Special Routine ID: Garnishment Routine 2

  • Amount/Percent 1: 600 - 15 (min wage) * 40 (hrs) * 1 (weeks)

  • Amount/Percent 2: 1200 - 15 (min wage) * 40 (hrs) * 2 (weeks)

  • Amount/Percent 3: 1300.05 - 15 (min wage) * 40 (hrs) * 2.16667 (weeks)

  • Amount/Percent 4: 2599.9 - 15 (min wage) * 40 (hrs) * 4.333 (weeks)

  • Amount/Percent 5: 31200 - 15 (min wage) * 40 (hrs) * 52 (weeks)

  • Amount/Percent 6: 0.20

  • Amount/Percent 7: 0.40 (Considered by calculation 2 since it is not 0/null)

  • Amount/Percent 8: 10

  • Amount/Percent 9: 1

A semi-monthly employee has the following deductions:

  • Child Support deduction of $100/month

  • Garnishment deduction (GARN1) for $200 each pay period with a contributed goal of $0 and goal of $3,000 with an administrative fee of $1.50, enforcement fee of $10, and garnishment minimum amount of 471.25.

  • Garnishment deduction (GARN2) for 10 percent of their NDI with a contributed goal of $150, goal of $2000, and garnishment minimum amount of 1300.05.

The employee’s gross pay is $3500 with total federal and state taxes of $1092. The NDI is $2408.

The process for determining the Garnishment Limit for both GAR2 deductions is as follows:

  1. Gather all deductions where Special Routine ID = GAR2 and process lowest Deduction Processing Order Number first

  1. GARN1

  2. GARN2

  1. Process GARN1

  1. Determine Garnishment Minimum Amount

  2. NDI of $2408 is greater than the minimum of $471.25 so the garnishment will continue with processing.

  1. Determine Garnishment Limit

  2. Calculation 1

  3. $2,408 (NDI) * 0.25 (Amount/Percent 6) = $602

  • Calculation 2

  1. $2,408(NDI) - $471.25 (Amount/Percent 3) = $1936.75

  2. $602 is less than $1936.75 so the Garnishment Limit for GARN1 is $602.

  3. Process GARN2

  1. Determine Garnishment Minimum Amount

  2. NDI of $2408 is greater than the minimum of $1300.05 so the garnishment will continue with processing.

  1. Determine Garnishment Limit

  2. Calculation 1

  3. $2,408 (NDI) * 0.20 (Amount/Percent 6) = $481.60

  4. Calculation 2

  • 0.40 (Amount/Percent 7) * ($2,408(NDI) - $1300.05 (Amount/Percent 3)) = $443.18

  1. $443.18 is less than $481.60. However, since Amount/Percent 9 for GARN2 is 1 only calculation 1 is considered for garnishment limit. As a result, the garnishment limit for GARN2 will be $481.60

Determine Garnishment Amount

  • GARN1: $200 (flat dollar amount on DPLN)

  • GARN2: 2408 (NDI) * 0.10 (rate on DPLN) = $240.80

The pay period deductions are as follows:

  1. Mandatory Taxes: $1092

  2. Child Support = $100

  3. GARN1: $200

  1. The current total deductions contributing to the garnishment limit are $300 (Child Support + GARN1)

  2. $300 is less than the Garnishment Limit for GARN1 of $602 so the full amount for GARN1 is taken.

  1. Contribution to Goal = $290

  2. GARN1 has an enforcement fee of $10. This $10 is deducted from the amount contributed towards the goal.

  3. GARN2 = $181.60

  1. The garnishment limit for GARN2 is $481.60. The remaining garnishment limit after deducting $100 for Child Support and $200 for GARN1 is $181.60. The amount for GARN2 of $240.80 is greater than the remaining limit. As a result, the GARN2 amount will be set to $181.60 so that it does not exceed the limit.

  2. Contribution to Goal Amount = $331.60 ($181.60 + $150 (previously contributed amount))

  1. GNADN (Administrative Fee for GARN1) = $1.50

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