DEFINITION of 'Wage Assignment'

The procedure of taking money directly from an employee's compensation under the authority of a court order, in order to pay a debt obligation. Wage assignments are typically a last resort of a lender to receive repayment from a borrower who has previously failed to pay their debt obligation.

BREAKING DOWN 'Wage Assignment'

Typical reasons for a wage assignment may be items such child support payments, court fines and taxes that have gone unpaid for a prolonged period of time. Once mandated by a court and served to an employer, wage assignments are processed as part of an employer's payroll procedure -- the employee's regular paycheck is decreased by the amount of the assignment and noted on their pay stub.

Employees may sometimes be able to voluntarily undergo wage assignment to pay for things like union dues or contribute to a retirement fund.

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