Definition - What does Wage Assignment mean?
Wage assignment refers to a voluntary agreement where an employee carries a fiduciary responsibility of discharging outstanding debt against their earnings under an employer’s permission. While wage assignment is a form of garnishment, it represents a dutiful obligation by the applicant or employee to remit a portion of their income until financial hardship is no longer a burden. However, many companies are reluctant to hire people with debt issues because employers become a liaison between debtors and creditors, causing potential accounting and legal repercussions.
SureHire explains Wage Assignment
Although wage assignment demonstrates financial responsibility on the part of the employee, it can also serve as a drawback with job placement opportunities over the perceived stigma. However, potential job candidates can inform employers of their financial situation and a firm commitment to paying down their debt that can often dictate approval or refusal of employment. A prearranged payment method between a debtor and creditor can expedite fulfillment of debt owed on a timely basis. Because wage assignment can appear on a credit review during a background check, advance notice to employers can moderate the negative impact of the employer discovering the debt.
In many cases, wage assignment is a primary factor resulting from a personal or professional setback including dismissal from a job or medical emergency. A preliminary approach to reduce debt claims with creditors is a means of guaranteeing solvency to employers. But, the legal implications of default can create anxiety and stress that can disrupt job performance to the degree that morale and productivity begin to erode.
While wage assignment stipulates debt collection within an appointed time, employers can encounter liabilities and penalties due to accounting errors from their end. However, companies can avoid legal contingencies by introducing fiscal planning strategies that cover monetary resources including credit-to-debt budgeting for people deemed financial risks.
