What are best practices for processing child support garnishment payments, and record retention of them? It appears to me it should be done through Payroll instead of AP due to confidentiality concerns.


We have seen garnishments handled in both Payroll, AP, and by third parties (e.g., ADP does it). We do not have any survey data to verify the most common practice, however.

How best to handle it can depend on capabilities and your particular control environment. In the case of one of our experts, they handled garnishments in AP (until it was outsourced), primarily because their payroll department could not print checks (accounts payable had to do all of the corrected payroll checks as well); it was a control/security issue.  The company wanted to limit check printing and ensure it was secure, which is easier when there is only one source.

You are quite right regarding the issue of confidentiality. When AP handles garnishments, you must add heightened security similar to what AP must do with medical records, due to the sensitivity.  It can be a cumbersome. The process still begins in payroll, which has to (securely) provide you the information as to how much the payment is, where to send the check, which employee was involved, etc.  

So there is a strong case that garnishments should be handled in Payroll (or by an outsource payroll services provider). They have to touch it anyway and it is part of the employee's record. And besides the sensitivity of the garnishment itself, there are also issues regarding employees other than payroll being privy to wage information or anything wage-related. Handling it in AP requires additional special controls, causes extra work, and still doesn't get Payroll out of the loop.

Have more questions? Submit a request