I am an employer that has received a letter from Trellis Company instructing me to garnish wages for a student loan of an employee. It references federal law in giving them the authority to do this. However, there is no court order or anything else from a federal or state agency attached to it. It seems a bit strange that a private company can demand something from me.
I have two questions. First, don’t they need a court order? Second, if I am required to pay this, can I charge them a collection fee?
For federal student loans, an administrative wage garnishment (AWG) can be issued. No court order required.
It is not clear from what you shared if this is for a federal student loan. However, Trellis Company is an organization with the Department of Education to service Federal Family Education Loans (FFEL).
The federal student loan process is to notify the debtor prior to an AWG becoming effective.
Your employee had a chance to deal with this before it hit your desk. The debtor, “must be given the opportunity for a hearing to challenge the existence or amount of the debt and the terms of the repayment schedule. The garnishment cannot go forward if you request a hearing within 30 days of the receipt of the notice. If you request a hearing after that date, the garnishment will usually begin, but you can still request a hearing and stop the garnishment if you win your hearing.”
Besides asking for a hearing regarding the AWG, your employee can also contact the loan servicer and ask about a one-time rehabilitation to bring his loans out of default and enter an income-based repayment plan. If they act quickly they may be able to unwind the garnishment and avoid added collection fees.
Regarding if you can charge a fee, “That depends on the state; some states permit the imposition of a fee or charge on the employee. Federal law does not address the issue. You should check your state’s law.” – Source