FAQ Wage Garnishment
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Frequently Asked Questions


Q? What is a wage garnishment?
A wage garnishment is any legal or equitable procedure through which some portion of a person's earnings is required to be withheld by an employer for the payment of a debt. Most garnishments are made by court order. Other types of legal or equitable procedures include IRS or state tax collection agency levies for unpaid taxes and federal agency administrative garnishments for non-tax debts owed the federal government. Wage garnishments do not include voluntary wage assignments - that is, situations in which employees voluntarily agree that their employers may turn over some specified amount of their earnings to a creditor or creditors.

Q? What is the protection against discharge when wages are garnished?
The CCPA prohibits an employer from firing an employee whose earnings are subject to garnishment for any one debt, regardless of the number of levies made or proceedings brought to collect that debt, because of the single garnishment. The Act does not prohibit discharge because an employee's earnings are separately garnished for two or more debts.

Q? What are the restrictions on wage garnishment?
A The amount of pay subject to garnishment is based on an employee's "disposable earnings," which is the amount left after legally required deductions are made. Examples of such deductions include federal, state, and local taxes, the employee's share of State Unemployment Insurance and Social Security. It also includes withholdings for employee retirement systems required by law. Deductions not required by law - such as those for voluntary wage assignments, union dues, health and life insurance, contributions to charitable causes, purchases of savings bonds, retirement plan contributions (except those required by law) and payments to employers for payroll advances or purchases of merchandise - usually may not be subtracted from gross earnings when calculating disposable earnings under the CCPA. The law sets the maximum amount that may be garnished in any workweek or pay period, regardless of the number of garnishment orders received by the employer. For ordinary garnishments (i.e., those not for support, bankruptcy, or any state or federal tax), the weekly amount may not exceed the lesser of two figures: 25 percent of the employee's disposable earnings, or the amount by which an employee's disposable earnings are greater than 30 times the federal minimum wage.

Q? To whom does the law apply?
The law protects everyone receiving personal earnings, i.e., wages, salaries, commissions, bonuses, or other income - including earnings from a pension or retirement program. Tips are generally not considered earnings for the purposes of the wage garnishment law. The law applies in all 50 states, the District of Columbia, and all U.S. territories and possessions.

Q? What about child support and alimony?
A Specific restrictions apply to court orders for child support or alimony. The garnishment law allows up to 50 percent of a worker's disposable earnings to be garnished for these purposes if the worker is supporting another spouse or child, or up to 60 percent if the worker is not. An additional 5 percent may be garnished for support payments more than l2 weeks in arrears.

Q? Which Federal law regulates wage garnishment?
A The Federal Wage Garnishment Law, Consumer Credit Protection Act's Title 3 (CCPA) limits the amount of an employee's earnings that may be garnished and protects an employee from being fired if pay is garnished for only one debt. Title III is administered by the Wage and Hour Division of the Department of Labor's Employment Standards Administration. The Wage and Hour Division has no other authority with regard to garnishments. Questions over issues other than the amount being garnished or termination should be referred to the court or agency initiating the withholding action. For example, questions regarding the priority given to certain garnishments over others are not matters covered by Title III and may be referred to the court or agency initiating the garnishment action.

Q? Are there any exceptions to the law?
A The wage garnishment law specifies that the garnishment restrictions do not apply to certain bankruptcy court orders, or to debts due for federal or state taxes. If a state wage garnishment law differs from the CCPA, the law resulting in the smaller garnishment must be observed. You may be able to claim one or more exemptions and avoid paying the judgment or at least a portion of it.

Bank Account funds that are from:

Veterans Benefits
Child Support Payments
U.S. Government Pension
Unemployment Compensation
Supplemental Security Income (SSI)
Temporary Assistance for Needy Families
Certain funds in a joint or community account
Other public Assistance or Income allowed by State Law

In order to protect your right to claim these exemptions you must, within 28 days from the date on the Writ of Garnishment, deliver to the court clerk and mail a copy to the plaintiff, the completed Exemption Claim Form.


Employers FAQ

Q. Do I still have to comply if my employee's pay is already garnished?

A. Yes. You must comply, but the amount you withhold may be reduced. The law (15 USC § 1673) imposes a maximum on how much can be garnished at any one time. Currently, that maximum is 25 percent of the employee’s disposable pay until the prior garnishment(s) are satisfied or expired.

Administrative wage garnishment orders (AWG) don't expire, although some garnishments do expire before the full amount has been paid. Once a prior garnishment expires or is satisfied, the next garnishment in line usually takes over.

The same federal law that imposes a garnishment maximum also protects a "floor" level of income equal to 30 times the federal minimum wage per week.


Q. Can I ignore the Order if state law forbids wage garnishment?

A. No. AWG is authorized by a Federal law (20 USC § 1095a), which specifically preempts state law.


Q. What do I do if the Order says to send payments to someone other than OCAP?

A. Send the payments to the payee listed in the Order. Guaranty agencies such as OCAP are permitted to retain others to aid in the administration of the AWG process including the collection of payments under an Order.


Q. What if my employee works part-time and doesn't make enough to be withheld?

A. Contact us that the debtor doesn't earn enough to withhold.


Q. What are the consequences if I fail to comply?

A. A non-compliant employer will be liable for and subject to suit by OCAP to recover any amount the employer fails to withhold after receipt of notice of the AWG Order, plus attorneys’ fees, costs and, at the court’s discretion, punitive damages.


Q. Do I have to honor an AWG Order that isn't signed?

A. Yes. The law (20 USC § 1095a) doesn't require that the Order be signed to be valid and legally binding. However, if you have any question about the Order’s authenticity, please contact us.


Q. Can I impose a fee for administering this? If I can, who pays?

A. The statute and regulations authorizing AWG don't provide for an employer processing fee. This is an issue that you should discuss with your legal advisor.


Q. What should I do if my employee filed for protection under bankruptcy?

A. Contact us and include a copy of the 341 Meeting Notice or provide the case number, district, date of filing and the state where the action was filed. While we must cease our collection efforts during an active bankruptcy, please be advised that student loans are non-dischargeable in most cases.


Q. What should I do when I get a balance letter?

A. Update your records. Balance letters are sent periodically to keep you informed of the current outstanding balance.


Q. Do I also have to garnish my employee's bonus/commission check?

A. Yes. You must withhold 10 percent from all monies paid to the employee. Some restrictions do apply to some payments of workers' compensation, disability, etc.


Q. Does my employee have to consent to the order or sign the paperwork?

A. No. The information and forms sent to you are for your use only. There's nothing in the packet that requires the employee’s signature.


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