Can You Lose Your Job for Getting Garnished?

If you fail to pay a debt and do not make attempts to reach a repayment agreement with your creditor, the creditor may file a lawsuit against you to obtain the money. In most states, a creditor with a valid judgment can execute a wage garnishment, which orders your employer to send a portion of your earnings to the court for payment of your debt. Wage garnishment can cause substantial financial distress, and in some cases, may cost you your job.

Single Wage Garnishment

Federal law prevents an employer from terminating you based on a single wage garnishment within a 12-month period. If one creditor obtains a judgment against you and decides to garnish your wages to collect the judgment debt, you are protected from employment loss.

Multiple Wage Garnishments

Although you cannot lose your job solely on the basis of a single wage garnishment, federal law does not prohibit an employer from discharging you if it receives two or more garnishment orders from different creditors within a 12-month period. Whether you lose your job for multiple garnishments is at the discretion of your employer -- no federal or state law requires an employer to discharge you for multiple garnishments.

Effect on Your Employer

Wage garnishments create substantial work and expense for your employer. Your employer's payroll administrator must complete paperwork to withhold earnings, work with the court that issued the judgment to determine withholding amounts, and forward the garnished funds to the court. If you are subject to wage garnishments from multiple creditors, your employer may have to work with two or more courts to divide your garnishment payments.

Considerations

Federal and state laws limit the amount of your earnings that can be garnished for payment of a judgment debt. If your weekly earnings amount to less than 30 times the federal minimum hourly wage, a judgment creditor cannot execute a wage garnishment. Also, not all states permit garnishment of employment income -- creditors that obtain judgments in North Carolina, Texas, South Carolina and Pennsylvania cannot use wage garnishment as a collection strategy for debts other than taxes, alimony or child support.