When processing wage garnishments, ADP wants to cut out the middle man.
On July 7, Automatic Data Processing Inc., the company that handles payroll for about 1 in 6 U.S. workers, announced a new collaboration with Wolters Kluwer’s CT Corp. to help clients expedite wage garnishment orders.
According to a recent study by the ADP Research Institute, roughly 7 percent of employees have their wages garnished. These orders can take up significant resources on the part of the company, as they have to be processed within a legally required timeframe — or else the employer can be held liable, said Amorette Bryant, author of “The Complete Guide to Federal and State Garnishment.”
“Time is very important when it comes to a garnishment because the clock starts ticking when it is served at a CT office,” Bryant said. “Depending on the particular state law that they have to apply, the employer normally would have to get that set up within the same pay period that it is received. So time is very critical.”
CT Corp., as a registered agent, receives garnishment orders such as child support and tax liens on behalf of companies. Previously, CT Corp. delivered these orders to employers who would be responsible for either processing them internally or outsourcing them to a payroll services provider such as ADP.
With this partnership, rather than going through the employer, CT Corp. will send wage garnishment orders directly to ADP through secure application programming interfaces, which is designed to make the overall process more efficient for all parties.
“Because there wasn’t a relationship between ADP and the registered agent, the registered agent would send those notices to the employer and the employer would have to send them to ADP,” said Julie Farraj, vice president of garnishment services at ADP.
Through this more direct method, Farraj said, employers can reduce the administrative functions and related costs currently tied up in wage garnishments, saving the company time and money.
Although Bryant said the concept isn’t entirely novel — child support, for example, has been handled this way for years — she said she believes the partnership will be very effective for ADP’s more than 625,000 clients. In addition to saving time and money, Bryant said that sending garnishment orders directly to a third-party such as ADP will make the overall process more secure and better protect the privacy of the employees whose wages are being garnished.
“I see it as more secure, to the extent that you don’t have other people within the company viewing those documents,” Bryant said.
To further ensure the security and confidentially of these documents, which can often contain personal information about employees, Farraj said ADP and CT Corp. have established a secure channel requiring complete authentication in addition to each partner’s previously existing security protocols.
“This actually increases security because you’re eliminating a step,” Farraj said.
While Bryant recommends that companies outline their expectations for wage garnishments within their contract agreements with ADP, overall she said this sort of collaboration between agents and third-party service providers can only benefit employers.
“Anything that can be done to streamline the process and make sure the documents are going where they need to go in order to be processed within the legally required time that they have to be processed, the better off everyone is,” Bryant said.