HR Charging a $25 Processing Fee
JJHughes
1 Post
Our entire company received this email today from the HR Director. We have roughly 150 employees and our HR team consist of an HR Generalist, Benefits Coordinator, and HR Director. The general consensus is that this email is just in poor taste and inappropriate. Thoughts?
Over the course of the past 6 months, the Human Resources Department has been burdened with processing a large number of wage withholding orders and wage garnishments from the courts. While it is very unfortunate that we have so many employees enduring difficult financial times, the amount of time being allotted to processing these requests from the courts has become a burden on the department. The process for each request from the courts as well as corresponding with them and you regarding the matters are consuming a lot of time. Especially in cases where employees have multiple requests or when the employee resides in states where multiple correspondence is required on a monthly basis. Further, our time is often taken up by employees contacting us and disputing the wage orders, only to hear that they are orders, not suggestions from the court. We have no say in the matter and are required to abide by the rulings. To prevent this from occurring, we recommend you address your financial matters directly with the creditors and individuals seeking financial resolution from you.
Effective July 1, 2011 any new wage orders received for processing will be assessed a $25 set up fee that will be payroll deducted from your paycheck. At the time the order is received, you will be sent an acknowledgement form authorization the deduction advising you of the fee. The fee will cover the expenses related in processing all matters related to that order.
Lastly, if you are experiencing difficult financial times you are encouraged to utilize the resources made available to you by the company through the Employee Assistance Program. This service is free to you and your family and all matters are confidential. Information on how to access the Employee Assistance Program may be found in the benefits section of Ultipro as well as attached to this email. Further, you have access to Bob Lucca a financial advisor for Principal Financial who not only is able to consult with you about your 401k plan but also discuss other financial strategies with you to fit your lifestyle and help you develop budgeting strategies.
Please contact me with any questions regarding this matter.
Comments
The fee aspect is really a payroll question, not a HR question. Even so, I believe the administrative fee that can be charged for handling a garnishment is regulated in most if not all states, and $25 is higher than anything I have ever heard of. Moreover, some states do not permit levying a fee at all.
The fact is that handling wage garnishments, paricularly for multistate employers, is a highly inefficient, expensive process.
When the employee puts his/her employer smack dab in the middle of his/her personal financial issues, then yes, the employer has the right to ask for the employee to pay a fee to do so. Many garnishments allow for this, but most I have seen are on a per payment basis with a maximum. That is going to depend however on your state's wage laws. $25 does seem a bit high......but overall is probablly less than the per payment annually.
Luckily I do HR/process payroll in a state (TX) that only allows for the IRS/child support and student loan garnishments for close to 100 employees in a couple of businesses with high turnover. But I don't get too many. When I do, it takes more time than one would think to verify and set it up in the payroll system. Because of course no two are the same. Then each payroll period, it is MY responsibility to make sure the payment comes out the employees' checks and makes it to the correct garnishor..... To me, by the time it gets to the employer, there have been plenty of different solutions/avenues that the employee could have taken to keep it from going there.
There really must be an epidemic for your HR to come up with this! Smart employers try to limit this exposure to only what is required under the law. Don't know whether this will slow it down or not, but I applaud them for trying!
I have been procesing payroll for several years now and have become very familiar with all different types of garnishments. I have only worked for WI employers, but I know that most do have a courtesy fee associated with it. I too have never seen anything as high as $25; the highest I've seen is $15 for State garnishments requested from the court systems. The $15 check is sent by the person collecting the money through wage garnishment and these garnishments can run for no longer than 13 weeks.
I agree that the way this policy was conveyed was a bit distasteful and almost insulting. My current employer has about the same number of employees and also has very high turnover along with several employees who have fallen upon some bad luck with wage levies and garnishments. The culture of our company is very family oriented and I couldn't imagine asking for that. I am the only person who processes payroll and handles HR and I do not find the work taxing. When I first started processing garnishments, it took me a while because of the uncertainty so maybe some money invested into additional training would be more beneficial rather than adding to the employees' financial burdens.
I think something like this is bad for morale too. In my opinion, I wouldn't have set up the fee, but I would have worked with the employees to try and alleviate if not completely correct the troubles they got themselves into. The last paragraph has some good advice to employees. I would put that into the employee's garnishment notification letter.
I have the feeling that this company tries to solve an issue, that can be solved in a much more human way. The HR department gets overloaded with requests, because people are not able to keep their financing in order. Before the economic crises many people sought a second job and creditors seem to be much more flexible. Now this has changed the real issue start to float to the surface.
I assume that HR does not want to hande those requests as their core business. By asking $25.00 they do nothing to stop the requests, but they might even make the situation (don't have enough money to pay the bills) worse.
When working with clients who face this issue, we work together with the case worker (social worker) of the state, to support the employee to get back on their feet and learn them to deal with the challenges in life. They have to commit to basic rules, like not missing one workday and working with the state resources to stay at the company. A local bank provides free lunch and learns session that covers how to manage money, credit scores etc. The result is that people learn to stay out of trouble and turnover reduces drasticly. let's don't talk about engagement and producitivity increases.
This tip might help the company who just added another layer on top of the real issue.
Mirjam