Setting Up Garnishments

This chapter discusses how to:

Establish a garnishment deduction.
(USA) Maintain garnishment proration rules.
Define disposable earnings for garnishments.
(USA) Define U.S. garnishment rules.
(CAN) Define Canadian garnishment rules.

See Also

Administering Garnishments

Setting Up Vendors

Establishing a Garnishment Deduction

This section discusses how to:

Set up the Deduction table for garnishment deductions.
Set up the General Deduction table for garnishment deductions.

Setting Up the Deduction Table for Garnishments Deductions

To define deduction information for garnishments:

Specify a garnishment deduction priority on the Deduction Table - Setup page.
1. Enter a number that is large enough to enable the system to deduct taxes and required deductions before it attempts to deduct garnishments in the Deduction Priority field.
2. Select Garnishment in the Special Processing field.
  
  This deduction code becomes the default garnishment deduction code.
  
  Arrears do not apply to garnishment deductions. Instead, establish a proration rule.
  
  Note. (CAN) For Canada, there is no default garnishment deduction code because you can define multiple before-tax and after-tax deduction codes to process garnishments. In addition, proration rules don’t apply for Canada.
Assign a garnishment deduction classification on the Deduction Table - Tax Class page.
1. For the U.S., select After-Tax as the deduction classification. For Canada, select Before-Tax or After-Tax.
  
  For example, a Canadian child support garnishment might be a before-tax garnishment.
2. Select None as the Canadian sales tax.
Specify how the garnishment affects taxable grosses on the Deduction Table - Tax Effect page.
- For U.S. companies, garnishments have no effect on taxable grosses.
- For Canadian companies: after-tax garnishments have no effect on taxable grosses; before-tax garnishments do affect taxable grosses.
Specify how the system deducts the garnishment from pay on the Deduction Table - Process page.
1. Select the Partial Deduction Allowed check box for U.S. only.
  
  Don’t select for Canada or U.S. federal government. Partial deductions apply only to jurisdictions that permit prorated payments.
2. Select the Deductions Taken From Sep Chk (deductions taken from separate check) check box for U.S., Canada, and U.S. federal government.
3. Don’t select the Deduction Arrears Allowed or Stop Deduction at Termination check boxes.
  
  (For Canadian processing, this would be the recommended setup).
4. The Maximum Yearly Deduction field should be left blank.
  
  Define the garnishment limit on the Garnishment Specification Data page when setting up an employee's garnishment.

Note. Don’t specify garnishment withholding frequencies on the Schedule page in the Deduction Table component (DEDUCTION_TABLE). Define the withholding frequency for garnishment deductions at the employee level on the Garnishment Specification Data page.

See Also

Defining Deductions

(USA) Maintaining Garnishment Proration Rules

Setting Up the General Deduction Table for Garnishment Deductions

To establish a garnishment deduction, select Flat Amount as the deduction calculation routine on the General Deduction Table page. The system automatically calculates the amount based on the employee’s Garnishment Specification records, and deducts the appropriate amount, depending on the garnishment rules.

See Also

Defining General Deductions

(USA) Maintaining Garnishment Proration Rules

This section provides an overview of garnishment proration rules and discusses how to:

Apply garnishment proration rules.
Maintain state garnishment proration rules.

Note. (CAN) In Canada proration rules do not apply; courts and authorized agencies issue garnishment orders and determine proration requirements.

Understanding Garnishment Proration Rules

Because garnishments cannot go into arrears, some states require that employers prorate an employee’s garnishments when there is insufficient monies available to cover all garnishments of the same type (for example, if an employee has two child support garnishments and not enough money to cover both of them).

The system uses the proration rule of the state from the Garnish Law Source field on the Garnishment Spec Data 6 page. If multiple garnishments of the same type are received from different states, enter the state where the employee works for all of the garnishments.

Pages Used to Maintain Garnishment Proration Rules

Page Name	Object Name	Navigation	Usage
State Proration Rules	GARN_PRORATE_RL	Set Up HRMS, Product Related, Payroll for North America, Garnishments, State Proration Rules, State Proration Rules	Apply state rules to employee garnishments.
Proration Rules Definition	GARN_PRORATE_DF	Set Up HRMS, Product Related, Payroll for North America, Garnishments, Proration Rules Definition, Proration Rules Definition	Maintain rules used by states that permit proration of garnishments.
Garn Proration Rules Report (garnishment proration rules report)	PRCSRUNCNTL	Set Up HRMS, Product Related, Payroll for North America, Garnishment Table Reports, Garnishment Proration Rules, Garn Proration Rules Report	Generate PAY720 that lists proration rules from the Garnishment table.

Applying Garnishment Proration Rules

Access the State Proration Rules page.

Prorate Rule ID

Identifies the proration rule from the Garnishment Proration Definition table.

Description

Displays the text of the rule the payroll system follows when applying the proration rule. PeopleSoft maintains this information in the Garnishment Proration Definition table.

Maintaining State Garnishment Proration Rules

Access the Proration Rules Definition page.

PeopleSoft maintains the Garnishment Proration Definition table with a proration rule ID and text for each rule used by states that permit proration of garnishments. If you make any changes or additions to this table, you become responsible for maintaining these records.

Defining Disposable Earnings for Garnishments

This section provides an overview of disposable earnings for garnishments and discusses how to:

(USA) Review and update U.S. disposable earnings definitions.
(CAN) Review and update Canadian disposable earnings definitions.

Understanding Disposable Earnings for Garnishments

Disposable earnings are the earnings subject to garnishment. What constitutes disposable earnings varies according to the governing jurisdiction (that is, federal, state, provincial, or local authority). For example, a disposable earnings definition might specify the calculation of an employee’s gross earnings minus all federal and state taxes and health insurance premiums.

PeopleSoft maintains and delivers the standard federal and state disposable earnings definitions with Payroll for North America.

Pages Used to Define Disposable Earnings for Garnishments

Page Name	Object Name	Navigation	Usage
Disposable Earnings Definition	GARNISH_DE_DEFN	Set Up HRMS, Product Related, Payroll for North America, Garnishments, Disposable Earnings Defn, Disposable Earnings Definition	(USA) Review and update disposable earnings definitions.
Disposable Earnings Definition (Canada)	GARNISH_DE_DEFN_CN	Set Up HRMS, Product Related, Payroll for North America, Garnishments, Disposable Earnings Defn CAN, Disposable Earnings Definition	Review and update Canadian disposable earnings definitions.
Disposable Earnings Defn Rpt (disposable earnings definition report)	PRCSRUNCNTL	Set Up HRMS, Product Related, Payroll for North America, Garnishment Table Reports, Disposable Earnings Definition, Disposable Earnings Defn Rpt	Generate PAY716 that lists information from the Disposable Earnings Definition table, where you define disposable earnings that are subject to garnishment and garnishment exemption parameters.

(USA) Reviewing and Updating U.S. Disposable Earnings Definitions

Access the Disposable Earnings Definition page.

Note. Courts frequently issue garnishment orders defining disposable earnings definitions that are different from standard federal and state definitions. In such a case, use this page to establish a record of the court’s individual definition. You are responsible for maintaining these records.

DE Definition ID (disposable earnings definition ID)	This ID links the garnishment disposable earnings definition to the applicable Garnishment Rules table.
Subtract from Gross	Specify what to subtract from the gross, such as an employee’s Federal Taxes, State Taxes, Local Taxes, or Child Support payments.

Reduction to DE

Use this group box to enter deductions to apply when calculating disposable earnings. Some court orders require that you subtract deductions from the employee’s gross pay to arrive at disposable earnings.

Deduction Classification

Specify After-Tax or Before-Tax.

For example, if an employee paying child support has health insurance that covers his estranged wife and child, a judge might order you to subtract the health deduction from his disposable earnings.

Important! For U.S. federal tax levies, the Internal Revenue Service defines disposable earnings as gross earnings minus voluntary and involuntary deductions in existence when the employer receives the garnishment order. Therefore, you can apply only involuntary increases in those existing deductions to the disposable earnings calculation for garnishments of this type. PeopleSoft provides FEDTAXLEVY as the DE definition ID for federal tax levies and for state tax levies for which the same rules apply. For the DE definition ID FEDTAXLEVY, use the Reduction to DE (reduction to disposable earnings) group box to identify only those deductions that you cannot apply to the disposable earnings calculation.

Important! The PeopleSoft-maintained garnishment disposable earnings definitions are complete as delivered except for deductions to include or exclude when determining the disposable earnings subject to garnishment. During the implementation process, enter the deductions pertaining to specific disposable earnings definitions.

(CAN) Reviewing and Updating Canadian Disposable Earnings Definitions

Access the Disposable Earnings Definition (Canada) page.

Note. Most of these fields have the same function as the U.S. version of the Garnishment DE Definition page, except the following.

DE Definition ID

PeopleSoft maintains two Canadian federal disposable earnings definitions:

FEDERALCAN: Includes taxable benefits and subtracts statutory deductions (that is, income tax, Canada and/or Quebec Pension Plan [CPP/QPP], and Employment Insurance [EI]).

FEDCANEXBN: Excludes taxable benefits and subtracts statutory deductions (that is, income tax, CPP/QPP, and EI) .

These definitions are part of Payroll for North America.

Adjustment to Gross

Courts and other authorized jurisdictions might issue garnishment orders establishing disposable earnings that are different from standard definitions. In such a case, use the Garnishment DE Defn (Canada) page to establish a record of the court’s individual definition. The maintenance of these records is your responsibility.

Statutory Deductions and Child Support

These check boxes are for your information only.

Reduction to DE

Some court orders specify deductions, such as union dues, that you can use to reduce disposable earnings. If so, use this group box to enter the deductions to use when calculating disposable earnings.

(USA) Defining U.S. Garnishment Rules

This section lists common elements and discusses how to maintain exemption calculation methods and data.

Note. Payroll for North America provides most of the garnishment rules that U.S. federal and state governments use. Federal software also provides information for U.S. localities and Canadian provinces.

Common Elements Used in This Section

Garnish Law Source and Rule ID

Displays the jurisdictional entity (garnish law source) and unique rule ID that identify each garnishment rule. This information links the Garnishment Rules Table1 page to the garnishment specification data for an individual employee.

Pages Used to Define U.S. Garnishment Rules

Page Name	Object Name	Navigation	Usage
Garnishment Rules Table1	GARNISH_RULE_TBL1	Set Up HRMS, Product Related, Payroll for North America, Garnishments, Rules Table, Garnishment Rules Table1	View the basic definition for a garnishment rule.
Garnishment Rules Table2	GARNISH_RULE_TBL2	Set Up HRMS, Product Related, Payroll for North America, Garnishments, Rules Table, Garnishment Rules Table2	Maintain exemption calculation methods and data.
Garnishment Rules Report	PRCSRUNCNTL	Set Up HRMS, Product Related, Payroll for North America, Garnishment Table Reports, Garnishment Rules, Garnishment Rules Report	Generate the PAY715 report, which prints the Garnishment Rule table by listing the rules for each state.

Maintaining Exemption Calculation Methods and Data

Access the Garnishment Rules Table2 page.

Exemption Calculation

If multiple calculation methods exist, the system uses each one and selects the method most favorable to the individual employee—that is, the method with the largest exemption amount, which results in deducting the least possible amount from the employee’s paycheck per pay period.

General Calculation

If you select this option, the system calculates the exemption as follows, based on the exemption variables:

exempt percent + exempt amount + (exempt amount per dependent × number of dependents) + (exempt amount per allowance × number of allowances)

The number of dependents comes from the Dep/Exempt Count (dependent or exemption count) field on the Garnishment Spec Data 6 page. The number of allowances comes from the Allowance Count field on the same page.

General Calc with Entered Amt (general calculation with entered amount)

If you select this option, the calculation is the same as the general calculation except that the system uses the exempt amount from the Garnishment Spec Data 6 page instead of the exempt amount from the Garnishment Rules Table2 page.

Based on Minimum Hourly Wage

If you select this option, enter the minimum hourly wage in the Exempt Amount field. The system calculates as follows:

(exempt amount × exempt hours) + (exempt amount per dependent × number of dependents)

Note. You can review the PeopleSoft-maintained information on the Garnishment Rules Table1 and Garnishment Rules Table2 pages in the Define Payroll Process component. However, if you have recommended changes, please contact the PeopleSoft Global Support Center, or follow the guidelines for updating PeopleSoft-maintained tables in the PeopleSoft Application Fundamentals for HRMS PeopleBook.

See Also

Setting Up Payroll Tax Tables

(CAN) Defining Canadian Garnishment Rules

This section provides an overview of Canadian garnishment formulas, lists common elements, and discusses how to:

Specify adjustments to disposable earnings.
Select exemption amounts.
Define calculation formulas.

Note. Payroll for North America provides garnishment rules for the majority of federal and provincial garnishment requirements.

Understanding Canadian Garnishment Formulas

You define calculation formulas on the Garnishment Rules Table - Calculation Formula page. To better understand how garnishment rules work, consider this example, using the BC garnish law source and GEN/DEP rule ID.

Use the following steps:

Calculate the disposable earnings (DE for rule):

earnings subject to garnishment − statutory deductions = disposable earnings
Calculate the total disposable earnings (DE for rule):

result of step one − selected deductions = total disposable earnings
Calculate the amount of exemptions:

result of step two × exempt percent = exemption

Because the condition is Min/Max Check, the system compares the calculation results to the minimum and maximum exemptions amounts on the Exemption Variables page. If the amount is less then the minimum, the system uses the minimum. If the amount is greater than the maximum, the system uses the maximum.
Calculate the amount available for garnishment:

result of step two − result of step three = amount available for garnishment.
- The step two result is the total disposable earnings.
- The step three result is the total amount exempt from the garnishment.

Common Elements Used in This Section

Garnish Law Source and Rule ID

Displays the province code/abbreviation or jurisdictional entity (garnish law source) and the unique rule ID that identify a garnishment rule. You can use any rule if it applies to a garnishment situation, regardless of the original province designation. The ZZ value identifies federally related orders. This information links the Garnishment Rules Table1 page to the garnishment specification data for an individual employee.

Pages Used to Define Canadian Garnishment Rules

Page Name	Object Name	Navigation	Usage
Rules Table CAN - Description	GARN_RULE_TBL1_CN	Set Up HRMS, Product Related, Payroll for North America, Garnishments, Rules Table CAN, Description	Define basic information for a garnishment rule.
Earnings Inclusions/Exclusions	GARN_RULE_TBL2_CN	Set Up HRMS, Product Related, Payroll for North America, Garnishments, Rules Table CAN, Earnings Inclusions/Exclusions	Specify adjustments to disposable earnings, override selections in the Earnings table, and specify whether to include or exclude earnings codes in the garnishment process.
Exemption Variables	GARN_RULE_TBL4_CN	Set Up HRMS, Product Related, Payroll for North America, Garnishments, Rules Table CAN, Exemption Variables	Specify exemption variables and amounts for specific frequencies (that is, daily, weekly, or monthly).
Calculation Formula	GARN_RULE_TBL3_CN	Set Up HRMS, Product Related, Payroll for North America, Garnishments, Rules Table CAN, Calculation Formula	Define the formulas that calculate a garnishment. Create formulas that consist of multiple steps for calculating disposable earnings for rules, exemptions, the amount available for garnishment, and (in some provinces) the garnishment amount.
Garnishment Rules Report (Canada)	PRCSRUNCNTL	Set Up HRMS, Product Related, Payroll for North America, Garnishment Table Reports, Garnishment Rules CAN, Garnishment Rules Report	Generate the PAY715CN report, which prints the Garnishment Rule table by listing the rules for each province and territory.

Specifying Adjustments to Disposable Earnings

Access the Earnings Inclusions/Exclusions page.

Earnings Code Inclusions/Exclusions

Earnings Code

This field enables you to override selections in the Earnings table. If no earnings codes apply, leave this field blank.

Selecting Exemption Amounts

Access the Exemption Variables page.

Exemption Variables

Dependents Excluded

Specify the number of dependents to exclude before applying the exempt amount per dependent. For example, for an exemption of 30 CAD per dependent when an employee has more than two dependents, enter 2 in this field, and enter 30 in the Exempt Amount Per Dependent field.

Note. If your selections here do not match the previously defined pay frequency, the system automatically performs a conversion for you.

Defining Calculation Formulas

Access the Calculation Formula page.

Calculation Formula

Use this group box to create step-by-step formulas for calculating garnishments or the amount available for garnishment.

Step	Displays the actual step or sequence number in the calculation formula.
DE for Rule (disposable earnings for rule), Exemption, or Amt Available for Garnishment (amount available for garnishment)	Select the option that identifies what the formula is calculating.
Condition	Specify how to handle the end result of each step, when necessary.

Note. It is important that you select the correct DE definition ID. For Canadian garnishment processing, there are only two supported IDs (FEDERALCAN and FEDCANEXBN).

Prorate Rule ID	Identifies the proration rule from the Garnishment Proration Definition table.
Description	Displays the text of the rule the payroll system follows when applying the proration rule. PeopleSoft maintains this information in the Garnishment Proration Definition table.