Pennsylvania has recently passed legislation on collecting fees for withholding child support payments. Normally this is good news for payroll. However, the PA legislature has really gone out of its way to make it tough for payroll to enforce the new rules. If I can get on my soap box for one moment, this is the reason I dread state legislatures getting involved in enacting legislation that is payroll related before check with payroll professionals, which they never do! This legislation, in fact, could cause “nightmares” for payroll systems as it goes against the norm for collecting such fees. Basically it boils down to this, which was distributed by the Office of Child Support Enforcement (OCSE):
On July 1, 2016 Governor Tom Wolf signed Act 64, which amends Section 4348(j) of Title 23 of the Pennsylvania Consolidated Statutes. Section 4348(j) permits employers to charge their employees an administrative fee for withholding income for support. Employers were previously permitted to deduct up to two percent of the ordered amount per pay period as reimbursement for administrative costs related to withholding support. Effective August 30, 2016, employers may deduct a one-time fee of $50 for reimbursement of expenses related to withholding income for support. The two-percent fee is no longer permitted. There are no other changes to the law. Pennsylvania’s income withholding requirements stipulate that administrative fees cannot be deducted from the withholding amount and that Consumer Credit Protection Act (CCPA) limitations apply to amounts withheld from the obligor’s income.
The Pennsylvania Bureau of Child Support Enforcement is providing the Frequently Asked Questions below to address concerns related to the implementation of the new fee. Additional questions regarding the implementation of Act 64 should be directed to the Pennsylvania State Collection and Disbursement Unit at 1-877-676-9580.
Frequently Asked Questions:
1. Can employers assess the fee on subsequent orders?
Answer: The one-time $50 fee applies to each employee, not each order. Therefore, employers may only collect up to $50 in administrative fees for the duration of the individual’s employment, regardless of the number of income attachments received for the employee.
2. How should employers handle employees who left employment and were subsequently rehired? When can the fee be reassessed?
Answer: The $50 one-time fee limitation applies for the duration of the individual’s employment. Seasonal, transient, and other typically low-income employees will be adversely affected by Act 64 if each subsequent rehire with the same company is regarded as a new eligibility period for the $50 one-time fee. Therefore, rehired individuals are only eligible for a new $50 fee when their start date is greater than one year from their previous leave date.
3. What should employers do if they are unable to update their payroll system before the August 30, 2016 effective date?
Answer: Employers may withhold the one-time $50 fee at any time during the income attached employee’s tenure with the company. Employers who are unable to update their payroll systems before August 30, 2016 may elect to withhold the fee after their system updates are complete. Employers may not continue to withhold a percentage fee until they are able to take the $50 one-time fee.
So payroll can only deduct a one-time fee per employee no matter how many income withholding orders are received for that employee. PA child support has also provided additional clarification after releasing the above information. One addresses the issue of insufficient funds. If there are not enough funds to take the entire fee in one pay period, can it be pro-rated and taken over multiple periods? PA Child Support says yes, the employer may deduct the fee over multiple periods if there are insufficient funds to deduct in a single payment.
There are still a lot of unanswered questions for payroll. I will keep you posted on any further changes to the PA child support situation as they come in.