Wage Garnishments - Rights and Responsibilities

With the economy as it is, employees and small employers are faced with more wage garnishments than ever before. Questions are arising about what their rights and responsibilities and where to quickly get answers.

Wage garnishment occurs when an employer withholds the earnings of an individual for the payment of a debt as the result of a court order or other equitable procedure. You may not garnish wages unless directed by the court. The wage garnishment can be for child support or a previous debt owed by the employee. But what does this mean for the employer? Can an employer be held liable for not garnishing pay or garnishing too much of an employee’s pay?

Title III of the Consumer Credit Protection Act (CCPA) protects employees earnings that may be garnished in any workweek or pay period by limiting the amount of to the lesser of 25 percent of disposable earnings or the amount by which disposable earnings are greater than 30 times the federal minimum hourly wage prescribed by Section 6(a)(1) of the Fair Labor Standards Act of 1938. This limit applies regardless of how many garnishment orders an employer receives. The federal minimum wage is $6.55 per hour effective July 24, 2008 and $7.25 per hour effective July 24, 2009.

There is an exception - court orders for child support or alimony, Title III allows up to 50 percent of an employee's disposable earnings to be garnished if the employee is supporting a current spouse or child, and up to 60 percent if the employee is not doing so. An additional five percent may be garnished for support payments over 12 weeks in arrears.

"Disposable earnings" is the amount of earnings left after legally required deductions (e.g., federal, state and local taxes, Social Security, unemployment insurance, and state employee retirement systems) have been made. Deductions not required by law (e.g., union dues, health and life insurance, and charitable contributions) are not subtracted from gross earnings when the amount of disposable earnings for garnishment purposes is calculated.

Title III specifies that garnishment restrictions do not apply to bankruptcy court orders and debts due for federal and state taxes. Nor do they affect voluntary wage assignments, i.e., situations where workers voluntarily agree that their employers may turn over a specified amount of their earnings to a creditor or creditors.

Employee Rights
Title III prohibits an employer from discharging an employee because of garnishment of wages for any one indebtedness, regardless of the number of levies made or proceedings brought to collect it. Title III does not, however, protect an employee from discharge if the employee's earnings have been subject to garnishment for a second or subsequent debt.

Compliance Assistance Available
The Wage and Hour Division of the Employment Standards Administration administers and enforces Title III. More detailed information, including copies of explanatory brochures and regulatory and interpretative materials, may be obtained from the Wage and Hour Division’s Web site or by contacting your local Wage and Hour Division office. For additional compliance assistance, contact the Wage and Hour Division help line at 1-866-4USWAGE.

Penalties/Sanctions
Violations of Title III may result in reinstatement of a discharged employee, payment of back wages, and restoration of improperly garnished amounts. Employers who willfully violate the discharge provisions of the law may be prosecuted criminally and fined up to $1,000, or imprisoned for not more than one year, or both.

Relation to State, Local, and Other Federal Laws
If a state wage garnishment law differs from Title III, the employer must observe the law resulting in the smaller garnishment, or prohibiting the discharge of an employee because his or her earnings have been subject to garnishment for more than one debt. Sites like this one provides more information on state laws http://www.bcsalliance.com/y_debt_statelaws_garnishments.html