Employees across the country are feeling the weight of the economy, and that financial stress is increasingly showing up in the workplace. The rising costs of basic necessities like housing, groceries, and health care have led many to rely on credit card debt and other forms of borrowing to manage everyday expenses. As a result, many employees are carrying more debt than they can manage, and that is spilling over into the workplace.

While wage garnishments and wage assignments are not new, employers may be seeing them more often as employees face debt collection activities tied to credit card balances, medical bills, student loan balances, and other financial obligations.

If you receive a wage garnishment, do you know how to respond? What happens if multiple garnishment orders come in for the same employee? And how should you handle a wage assignment tied to a payday or installment loan?

Understanding the difference between a wage assignment and a wage garnishment is especially important in Nevada, where different rules may apply depending on the type of debt and how repayment is being pursued.

Wage Assignment vs. Wage Garnishment

Although the terms are sometimes used interchangeably, a wage assignment and a wage garnishment are not the same. The distinction matters because a wage garnishment generally carries legal force and often requires employer action, while a wage assignment may not be enforceable in the same way.

What is a Wage Assignment?

A wage assignment is a voluntary agreement between the employee and creditor, usually done as part of a loan or credit arrangement, to have a portion of the employee’s wages paid directly to the creditor if the employee defaults on their obligations.

While a wage assignment can look official, it is not a court order and doesn’t create an automatic obligation to withhold wages.

What is a Wage Garnishment?

In contrast, wage garnishment is an involuntary, court-ordered process whereby a creditor obtains a judgment against the employee for an outstanding financial obligation. Wage garnishment often comes up related to child support, tax levies, and student loans, but can also arise with consumer debt.

Because wage garnishment is a legal mandate, there is no discretion about whether an employer complies or not.

Why Nevada Employers Should Review Each Request Carefully

Not every request to withhold wages has the same legal status. That is why employers should review each request before making any deductions from an employee’s paycheck.

It is important to determine what type of request was received. Is it a court order or an order from a government agency? Is it a request from a creditor? Taking time to confirm what type of request was received can help employers avoid payroll errors, employee disputes, and wage and hour claims.

Once an employer determines what type of request they have, the next step is handling it properly. For wage garnishments, that means responding timely and appropriately.

How Nevada Employers Should Respond to Garnishments

Each wage garnishment should be reviewed carefully to determine the type of withholding being requested, the entity that issued it, and whether there are any deadlines they need to adhere to. Employers should not make any assumptions based on prior wage garnishments they have received.

Next, and maybe the most obvious step, is to confirm that the individual listed in the order is employed with the company. Even if the individual listed is no longer employed with the company, employers still have an obligation to respond. Failure to respond to a wage garnishment, without good cause, has consequences. An employer can be held liable for the employee’s debt and face other fines and penalties.

When it comes to determining the amount to be withheld, math is involved, but the wage garnishment will guide you through determining the employee’s disposable earnings and the amount of withholding. Follow these instructions carefully to avoid withholding more than authorized.

In Nevada, the maximum amount that can be garnished is limited with some exceptions. If an employee’s weekly gross disposable earnings are $770 or less, the maximum amount that can be withheld is 18% of those disposable earnings or the amount by which their weekly disposable earnings exceed 50 times the federal minimum wage, whichever is less. If the employee’s weekly gross disposable earnings are more than $770, the maximum amount that can be withheld is 25% of those disposable earnings or the amount by which their weekly disposable earnings exceed 50 times the federal minimum wage, whichever is less. These limitations do not apply to child support, alimony, bankruptcy, or tax debts.

It’s important to keep records of when the garnishment was received, how the withholding amount was determined, and all payments submitted related to the wage garnishment.

Handling Multiple Wage Garnishments

Some employees may have multiple debt obligations and, as a result, multiple garnishments. That’s when things can get complicated. It may seem most logical to process wage garnishments in the order they are received, but that ignores some very important aspects of the law around wage garnishments.

First, it ignores that certain obligations, like child support or tax levies, may take priority over other debts. Just because a child support order came second, does not mean it takes a backseat to a consumer debt that came in first.

Second, it assumes that all wage garnishments can be honored in full at once. Depending on the amount and number of garnishments, the total amount of withholdings may exceed applicable withholding limits.

Because of the high possibility for costly mistakes, well-defined processes, thorough documentation, and the coordination between HR, payroll, and legal are important here.

Special Considerations for Wage Assignments and Consumer Debts

While wage assignments can be a valid way for an employee to satisfy a debt, they are highly regulated by state law. Therefore, it is important for employers to confirm that a wage assignment is legally enforceable before processing.

Confirm the Wage Assignment is Valid and Hasn’t Been Revoked

Because wage assignments are common with payday, internet, and other high-risk loans, employers need to be extra cautious and may need additional information before moving forward. Often, the agreement to the wage assignment is a routine part of the loan process. It may not be clear or apparent to the employee what they are agreeing to.

It’s important for employers to confirm with the employee that the wage assignment is valid and has not been revoked. Nevada law allows revocation of a wage assignment at any time with written notice to the lender.

Wage Assignments Not Enforceable for Installment Loans

Wage assignments for installment loans are not enforceable in Nevada. Employees are not allowed to use their current or future earnings as collateral for an installment loan. Any such assignment would be invalid and unenforceable.

While employers do not have to honor a demand for withholding based on a wage assignment connected to an installment loan, it does not mean the creditor cannot collect on the debt. It simply means they cannot use a wage assignment to do so.

When a Wage Assignment is Fraud

Employees cannot use wage assignments to avoid debt. Under Nevada law, if an employee has an unsatisfied judgment against them, they cannot enter into a wage assignment with another to avoid paying the debt. Such assignments are considered fraud and not valid. The judgment can still be enforced against the employee, despite the wage assignment.

Disciplinary Action Related to Employee Debt

Generally, an employer cannot discipline or discharge an employee solely because the employee has debt. Both federal and Nevada law provide protections to employees who have debt, but there are limitations to that protection.

Both the Consumer Credit Protection Act (CCPA) and Nevada law prohibit an employer from discharging or disciplining an employee because they have a single debt. That is true even if it results in extra administrative work for the employer. Of course, if the employee’s financial struggles are causing other workplace issues (e.g., attendance, performance, misconduct, etc.), employers are not required to ignore those issues and can take appropriate disciplinary action as long as they are responding to the workplace issue itself and not just the employee’s debt.

These protections do not extend to multiple debts. While not specifically prohibited, employers need to carefully consider whether to take disciplinary action, including termination, against employees with multiple debt obligations.

There is currently no law that provides explicit protections for employees with wage assignments.

Key Takeaway for Nevada Employers

As employees continue to navigate the rising cost of living (and take on debt to do so), employers can expect more debt-related challenges in the workplace.

Whether it’s a wage garnishment or a wage assignment, employers need to treat every withholding request as a compliance issue, not just as a payroll task. As these issues are likely to become more common, employers should take the opportunity to review their current practices and make sure they know how to respond.

Getting it wrong can lead to payroll errors, employee disputes, and potential legal exposure.

By: Audra L. Parton, JD

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