We are a company based in NJ, with an employee who is based and paying taxes in CA. We received a notice from the State of CA informing us that the employee owes taxes from 2006. The notice requires that we begin garnishing a portion of the employees wages to pay the debt in installments.

If the employee is disputing the finding, are we in a position to hold off garnishing the wages until the matter is resolved, or are we really given no flexibility here? Am I correct to assume that we must follow with the order for now, and if the employee is paying unjustifiably, then it is between them and the tax borough to settle?

If you were given an order to garnish the employee's wages, then you must follow it. You'll be notified if and when it's modified.

Yes you have to withhold, if you don't, the court will merely hold your company personally liable for the payment.

Thanks. The order is to garnish a percentage of the employee's "disposable" earnings. Is this the same as net earnings? I don't see what else it could mean, but just want to make sure.

No, it is the gross earnings minus taxes, the actual net may also have things like insurance or investments taken out

Disposable Income (http://www.investopedia.com/terms/d/disposableincome.asp)

Great, thanks for the info!