For consumers who have blatantly denied their financial obligations over a long period of time, the federal government is well within its rights to garnish wages in order to recover the full balance of any debts owed to the government or state agencies by the consumer. This process is rather complex, and quite expensive, though it is viewed as the single most effective way to recover debts and ensure that they are paid in full by consumers who are simply unwilling to work out any other form of compromise in terms of repayment and satisfaction.
Wage garnishment is always a last resort. Consumers who have been subject to this type of debt recovery are usually aware that they will be subject to some sort of garnishment or collection, but they are simply not sure how this will work and what their rights are when their wages are being garnished. Being current on federal laws governing garnishment, as well as the rights of those whose wages are being partially restricted under a garnishment order, can help ensure that no undue hardship is being experienced while the debt is repaid.
Employees, Their Employers, and Wage Garnishment: Rights and Processes
The federal government has an extensive series of laws governing the collection of wages in order to fully satisfy an obligation, including things like unpaid taxes, child support, and other obligations. All garnishment orders that are implemented by state, federal, or local governments are governed by the Consumer Credit Protection Act, or CCPA. This series of regulations specifically controls the amount of wages that can be garnished, the actions that can be taken by the employee and their employer, and other regulations associated with collection.
Specifically, most employees need to pay special attention to Title III of the Consumer Credit Protection Act. This provision within the law specifically states that employers cannot fire their employees due to a garnishment order that withholds a portion of the employee’s wages. This is absolutely essential, as many employers often feel intimidated by such an order and call the employee’s character into question, resulting in the occasional termination of employment. Under Title III, employees do have the right to sue if their termination was due to a garnishment order.
Title III of the Consumer Credit Protection Act also governs exactly what type of wages can be collected after a garnishment order has been successfully obtained. Generally, only those earnings applying to personal services can be collected for payment to a government agency. This includes wages, salaries, and commissions, as well as any bonuses or payments from a pension or retirement program. Tips given to an employee by a customer are generally not subject to garnishment. Furthermore, garnishment of wages can only occur based on a certain percentage, and Title III specifically mandates that garnishment not impair the customer’s financial status or prohibit them from maintaining their current standard of living.
Notable Quirks to the Consumer Credit Protection Act
It’s important to understand why a garnishment order is obtained in the first place. Generally, consumers pay their share of local, sate, and federal taxes, as well as other government fees and obligations like student loans and child support. If payment of any of these things suddenly stops without explanation, the government will immediately try to collect the debt and restart payment. Consumers often agree to these negotiations and make a friendly payment arrangement that works with their financial situation. In some cases, however, consumers are uncooperative, uncommunicative, and subject to forced collection of their obligations. This is when a garnishment order is used.
Regulations that apply to wage garnishment exist to protect both the employee subject to collection and the employer who hired them. Title III protects an employee from being fired for being subject to an initial garnishment but notably does not protect an individual from being terminated if a secondary or even tertiary garnishment is added to the mix. Employers can freely terminate employees who they feel have an excessive number of garnishments and unpaid financial obligations.
Title III regulations within the Consumer Credit Protection Act also govern how much of a person’s wages can be garnished at any given time. Currently, the law mandates that no more than 25 percent of a consumer’s disposable earnings be garnished at any given time. Alternatively, the government can garnish any earnings that are greater than 30 times the federal minimum hourly wage of $7.25. The lesser of these two amounts is the one that will be pursued during garnishment. The limit specified in Title III applies to all garnishments, meaning that any amount collected must be distributed between outstanding collections placed against the consumer.
Certain Cases Allow Higher Garnishment Amounts
While Title III is generally associated with consumer-friendly garnishment laws that maintain a decent standard of living, the same law is quite a bit different as it applies to things like child support, bankruptcy, federal tax payments, or taxes owed to state governments. If any of these amounts are being collected from an employee, it is possible for a full 50 percent of that employee’s disposable income to be collected during each pay period.
In cases of child support, the 50 percent garnishment limitation applies only to those spouses who are actively supporting a current child or former spouse. If that individual has stopped supporting their child or spouse, the maximum garnishment amount increases to a full 60 percent of the individual’s disposable income. A further 5 percent of disposable income can be garnished for support payments that are more than 12 months past due, with no good faith payment having been made by the consumer.
Disposable Earnings as Defined in the CCPA
The Consumer Credit Protection Act is responsible for defining the term “disposable earnings” as it applies to those consumers subject to a garnishment order. In the case of wage garnishments, disposable earnings refers to the amount of earnings leftover after all legally required deductions have been taken out of an employee’s pay. These deductions include things like local, state, and federal taxes, Social Security taxes, unemployment insurance deductions, and retirement account or pension contributions. Non-required deductions, like union dues, contributions to charity, health insurance, and life insurance, are not subtracted from a consumer’s gross earnings during garnishment. These amounts are considered disposable income in virtually all cases.
The restrictions set forth by Title III of the Consumer Credit Protection Act only apply in cases where the garnishment of wages is involuntary. Additionally, these restrictions do not apply to certain types of bankruptcy judgments, or for some federal or state taxes. Title III regulations do not apply to garnishments that are voluntary and agreed to by the consumer. Furthermore, those same regulations generally do allow for consumers to keep a substantial portion of their service-related earnings even as they’re being garnished to satisfy a government debt or a child support order.
As mentioned previously, Title III regulations do prohibit an employer from terminating an employee due to a single wag garnishment order. If an employee feels that this right has been violated, and their employer has broken the law, their complaint must be filed with the federal government via the Wage and Hour Division. Any such violations can result in the employee being reinstated in their prior position, as well as payment of back wages unpaid garnishment amounts incurred during the employee’s time away from their job.
If violations cannot be identified and solved informally, the government does reserve the right to restrain and remedy violators and violations. The Department of Labor is within their rights to initiate legal action against the employer, and those employers maybe fined up to $1,000. In extreme cases, they may face imprisonment for as long as one year.
State Laws: Exceptions to the Rule
States are allowed to set their own garnishment regulations, independent of the federal government. In cases where a state’s own wage garnishment law differs from the regulations set forth by Title III of the Consumer Credit Protection Act, the smaller of the two garnishments will be the one collected from the consumer’s disposable wages. Under either scenario, an employee will be protected from termination as a result of this garnishment.
Garnishment and the Collection of Federal Benefits
Those who collect federal benefits and owe a debt to the government that would ordinarily be garnished may be subject to collection from their bank account. This is rare, however, and must be pursued through the courts. Most often, benefits are not subject to garnishment due to state and federal laws that prohibit the practice. Specifically, the following programs are not subject to garnishment:
– Social Security
– Supplemental Security Income
– Civil Service, Federal Retirement, and Disability Benefits
– Veterans’ Benefits
– Student Loans and Assistance
– Railroad Retirement Benefits
– Foreign Service Retirement and Disability Benefits
– Merchant Seamen Wages
– Longshoremen’s’ and Harbor Workers Death and Disability Benefits
– Military Annuities and Survivor Benefits
– Compensation for Injury, Death, or Detention of Employees of U.S. Contractors Outside the United States
– FEMA Federal Disaster Assistance Benefits
In some cases, however, these benefits may be subject to garnishment. This is especially true for delinquent tax payments and student loans that have fallen significantly behind. State benefits may or may not be subject to wage garnishment. The laws and regulations for this practice are set by the unique garnishment guidelines passed by each state’s legislative bodies. If in doubt, be sure to contact state or local government agencies in order to inquire about the possibility of garnishment from state benefit programs.
Court Judgments and the Garnishment Process
It is well within the rights of a creditor to ask for the garnishment of funds against a debtor who is seriously past due on their payments. This process actually applies to the debtor’s bank account, rather than to their wages, and it can only be pursued after the court has issued a judgment against the debtor for the full amount of the debt owed. The creditor will need to get in touch with the debtor’s bank and request such a garnishment. At that time, the bank may hold the debtor’s funds until a ruling has been made in favor of garnishment. When such a ruling is made, the funds will be transferred out of the bank account and to the creditor who maintains the debt. In some cases, notification of a garnishment must be delivered to the debtor by either the government or the bank. This is not true in all states, however, and is subject to local laws.
If such a notification is received, it’s important to get in touch with an attorney as soon as possible. It’s also important to follow all recommended steps printed on the garnishment notice in order to ensure a smooth process and the best chance at overruling any garnishment order. Adhere to all deadlines, as well, to ensure that garnishment is not pursued.
Be aware that banks will freeze all funds when a garnishment order has been received. A frozen bank account will be virtually unusable, with all funds restricted from access by the account holder until the garnishment order has been satisfied or the creditor has dropped the case against the debtor. Checks written for the account will also become invalid until the account is unfrozen. Electronic payments, too, will cease to function properly, and insufficient funds charges may apply to all bounced payments. Because of this, it’s important to follow up on any outstanding checks or electronic debits in order to avoid NSF charges. Banks may lift a freeze on an account if a consumer informs them that the garnishment is for a small amount than the account balance, and requests that balance to be available for outstanding payments and debts.
Exemptions to Bank Account Garnishments
Attorneys will seek to prove that the funds available in a bank account are ineligible for garnishment, largely by showing that those funds are essential to the consumer’s standard of living or that the funds in the account have been electronically deposited as part of state or federal benefits programs that are ordinarily exempt from garnishments. Documents that substantiate these claims must be provided to the court in order to lift the freeze and return the bank account to its otherwise functional status.
If an order is issued by the judge that declares the funds ineligible for garnishment, this order should be presented to the bank immediately in order to release all frozen funds and return the bank account to active status. At this time, it should also be requested that the bank remove or waive any fees associated with insufficient funds activity or bounced payments.
Below are the state by state garnishment laws. However, please contact your state for the most current laws.
Alabama: Alabama wage garnishment laws are similar to federal laws. Creditors with judgments may take only 25% of disposible wages for garnishment. Please email Audits-Cashiering@labor.alabama.gov or call (334) 954-4723 for questions or concerns.
Alaska: The first $402.50 of an employee’s weekly net wages are exempt from garnishment. Creditors with judgments can take no more than 25% of the remaining wages. Contact the Alaska Department of Labor and Workforce Development at (907) 465-2700.
Arizona: Of nonexempt disposable earnings, creditors can take the lesser of 25% of an employees weekly earnings, or any amount of earnings that exceed 30 times the federal minimum wage. For more information contact the Arizona Industrial Commission at (602) 542-4515 in Phoenix or (520) 628-5459 in Tucson.
Arkansas: Wage garnishment rules state that if exempted earnings are 30 times minimum wage or less, a creditor cannot garnish wages. However, if exempted earnings are more than 30 times minimum wage, a creditor can only take that amount over minimum wage or 25% of disposable earnings. Up to 50% of income may be garnished to pay child support. Contact the Arkansas Department of Labor at(501) 682-4500.
California: Federal garnishment rules and exemptions are utilized in California. A creditor may take 25% of an employee’s wages. For information, contact the California Labor and Workforce Development Agency at (916) 263-1811.
Colorado: Creditors may garnish wages in the amount of 25% of disposable earnings, or the amount of earnings in excess of 30 times the current federal minimum wage. This means that when minimum wage is at $7.25 per hour, a creditor can garnish any disposable income beyond $217.50 per week. For more information contact the Colorado Department of Labor and Employment at (888) 390-7936.
Connecticut: Garnishments may be made on 25% of net earnings, or more if weekly disposable earnings exceed 40 times hourly minimum wage. For assistance call the Connecticut Department of Labor at (860) 263-6000.
Delaware: Garnishments can be made on 15% of disposable earnings or $127.50 of weekly income. Personal bank accounts cannot be garnished. To learn more, contact the Delaware Labor Department at (302) 451-3423.
District Of Columbia: Wage garnishment in D.C. is limited by Statute 15 U.S.C. §1673 and D.C. Statute Section 16-572 which states the most a creditor can garnish from wages is 25% of exempt earnings or 30 times federal minimum wage. The statute also states that D.C. Government employees are exempt from having their wages attached. To learn more about garnishments, contact the District Of Columbia Department of Employment Services at (202) 671-1900.
Florida: A creditor can garnish 25% of expendable income or the amount by which expendable income exceeds 30 times federal minimum wage, whatever amount is less. A creditor cannot garnish wages of those who make 30 times less of minimum wage. For those with no income, a creditor can claim $1,000 of the property value of the debtor’s automobile. Contact the Florida Agency For Workforce Innovation at (800) 342-3450 for more information.
Georgia: Federal garnishment rules and exemptions are used. Wages can be garnished for lesser of 25% of your exempt income or by earnings that exceed 30% of minimum wage. If expendable income is less than 30 times minimum wage, it cannot be garnished. To learn more about garnishment laws, contact the Georgia Department Of Labor at (404) 656-3011.
Guam: Guam Rules of Civil Procedure allow wage garnishments on the income and amounts are determined at the review of a case. To learn more about wage garnishment law in Guam, contact The Guam Department of Labor at (671) 475-7043.
Hawaii: Wage garnishment laws of Hawaii allow creditors to secure wages based on a three tier system. Creditors are entitled to 5% of a defendants first $100 of expendable earnings per month 10% of the second $100 of expendable earnings per month, and 20% of expendable earnings exceeding $200 per month. Visit the Hawaii Department Of Labor and Industrial Relations or call (808) 586-8842.
Idaho: In accordance with federal garnishment rules, creditors may take 25% of attachable earnings, or any amount more than 30 times the rate of minimum wage. Contact the Idaho Department Of Labor at (208) 332-3579 for more information.
Illinois: Creditors may garnish 15% of the expendable earnings or the amount of the expendable earnings that exceed 45 times the federal minimum hourly wage, whichever is greater. For more information contact the Illinois Department Of Labor at (312) 793-2800.
Indiana: The maximum wages allowed for garnishment in Indiana is the lesser of 25% of the expendable earnings or the amount of the expendable earnings over 30 times the minimum hourly wage. Visit the Indiana Department Of Labor or call the office at(317) 232-2655.
Iowa: This state follows federal guidelines for garnishments of wages. Creditors may garnish 25% of disposable wages, or earnings more than 30 times the federal standard of minimum wage. Learn more at the Iowa Workforce Development or call (515) 242-5870.
Kansas: The maximum garnishment is the 25% of expendable earnings or the amount of the expendable earnings that exceed 30 times minimum hourly wage. The state of Kansas does not allow more than one garnishment on a debtors income during any 30-day period. Learn more at the Kansas Department Of Labor or call (785) 296-5000.
Kentucky: This state follows the federal standard of wage garnishment. Creditors may garnish 25% of disposable income or 30 times minimum hourly wage, whichever is less. Contact the Kentucky Labor Cabinet at (502) 564-3070.
Louisiana: Litigants may garnish wages over 25% expendable earnings per week, but not less than 30 times minimum hourly wage. Learn more at the Louisiana Department Of Labor at (225) 342-3111.
Maine: This state allows wage garnishment of 25% of any expendable income or 40 times minimum wages per week, whichever amount is smaller. Contact the Maine Department Of Labor at (207) 623-7900.
Maryland: Garnishment laws vary by county in the state of Maryland. Creditors may garnish wages at a rate of 75% of disposable income up to $145 per week for a total exemption of $3,000 in recovered funds. The counties of Caroline, Worchester, Kent, and Queen Anne follow federal guidelines which allow litigants to garnish 25% of an employees wages. To learn more contact the Maryland Department Of Labor And Industry at (410) 767-2357.
Massachusetts: State of Massachusetts laws regarding wage garnishment are stricter than those imposed by the federal government. Litigants may garnish an employee’s wages at a rate 15% of the gross wages. Gross wages are those an employee earns before taxes and health insurance are deducted. Learn more about garnishments at the Massachusetts Department Of Labor And Work Force Development at (617) 626-7100.
Michigan: The state follows garnishment rules set by the federal government. Garnishments of 25% of expendable earnings, or the disposable earnings exceed 30 times the federal hourly minimum wage will be garnished. Learn more from the Michigan Department Of Labor And Economic Growth at (517) 335-0400.
Minnesota: The maximum amount wages that can be garnished per pay period may not exceed the 25% of the attachable earnings, or expendable earnings that exceed 40 times minimum hourly wage, whichever is lower. Learn more by contacting the Minnesota Department Of Labor And Industry at (651) 284-5070.
Mississippi: The state’s guidelines for wage garnishment are the same as the federal guidelines and exemptions. Wages can be garnished at 25% of nonessential earnings weekly or 30 times federal minimum hourly wage, whichever is less. Learn more about these laws by contacting the Mississippi Department Of Employment Security at (601) 321-6000.
Missouri: This state’s laws on wage garnishment differ from those set by the federal government. Creditors may garnish wages for the lesser of 25% of weekly disposable income or 10% of weekly disposable income if the garnishee is the head of household with other obligations. Learn more by contacting the Missouri Labor And Industrial Relations at (573) 751-7500.
Montana: The state follows federal procedures in garnishing wages. A litigant may garnish 25% of an employees disposable wages or 30 times the federal minimum hourly wage. As in federal cases, garnishments for child and alimony payments, defaulted student loans, and taxes in arrears may be garnished at any amount. Learn more about the Montana Department Of Labor And Industry by calling (406) 444-9091.
Nebraska: This state’s laws on wage garnishment are more stringent than those imposed by the federal government. A litigant may garnish the greater amount of 75% of expendable earnings, 85% if head of household, or 30 times federal minimum hourly wage. Contact the Nebraska Department Of Labor at (402) 471-9000 with questions.
Nevada: This state operates by the standard procedure of wage garnishments established by the federal government. Wages can be garnished no more than 25% of expendable earnings each week or 30 times federal minimum hourly wage, whichever is the lesser amount, with the exception of support orders. Learn more at the Nevada Department Of Business And Industry available at (702) 486-2650.
New Hampshire: This state has adopted garnishment laws that are less strict than those outlined by the federal government. A creditor may garnish an employee’s wages at disposable income 50 times federal minimum hourly wage. Future wages are exempt from garnishment and the litigant cannot request an ongoing order. Learn more about state laws outlined by the New Hampshire Department Of Labor at (603) 271-3176.
New Jersey: This state has enacted tough laws on wage garnishment that exceed the limits of federal guidelines. A creditor may garnish 10% gross of the employees wages, or 25% of disposal earnings, whichever is less. Creditors may not issue garnishments on those with gross wages of $154.50 or less per week. Contact the New Jersey Department Of Labor at (609) 777-3200 for more information.
New Mexico: Creditors may request a continuing wage garnishment order for collections. This means that when an employee with a garnishment obtains a different job, his wages will be automatically garnished according to the court order. Creditors may garnish up to 25% of expendable earnings from each weekly paycheck until the judgment is paid in full. Up to 50% of expendable wages are subject to a garnishment for child support, which cancel out subsequent garnishments. Contact the New Mexico Department Of Labor at (505) 841-8450 for more information.
New York: The state allows a maximum amount of garnishment of 10% of gross income. If the employee is previously garnished for alimony or child support, the combined garnishments cannot exceed twenty-five percent 25% of expendable earnings. Learn more by contacting the New York Department Of Labor at (518) 457-5519.
North Carolina: This state does not allow creditors to garnish the wages of a debtor. Garnishment is only permitted for the collection of taxes, ambulance fees, and child support payment in arrears. To learn more about garnishment laws, contact the North Carolina Department Of Labor at (919) 733-7166.
North Dakota: This state’s laws are less punitive than those set forth by the federal government. A creditor can garnish wages of 25% of the expendable earnings, or the amount of the expendable earnings exceeding 40 times the federal minimum hourly wage. The amount subject to garnishment will be reduced weekly by $20.00 for each dependent family member residing with the defendant. Contact the North Dakota Department Of Labor at (701) 328-2660 for more information.
Ohio: The state follows federal garnishment rules and exemptions. A creditor may garnish wages of 25% of disposable earnings, or wages that are available at less then 30 times the current federal minimum wage. Learn more by contacting the Ohio Department Of Commerce at (614) 644-2239.
Oklahoma: In this state, federal regulations and exemptions apply. Creditors may garnish 25% of non-essential income or income exceeding 30 times the rate the minimum wage. Learn more by contacting the Oklahoma Department Of Labor at (405) 528-1500.
Oregon: In accordance with federal guidelines, this state provides an exemption of 75% of expendable earnings or 40 times the federal minimum hourly wage for garnishments. Call the Oregon Bureau Of Labor And Industries at (971) 673-0761 for more information.
Pennsylvania: This state does not allow creditors to garnish wages to collect on debts. The garnishment for wages is only permitted for taxes in arrears, child support and alimony payments, and unpaid student loans. Learn more by contacting the Pennsylvania Department Of Labor And Industry at (717) 787-5279.
Puerto Rico: The territory of Puerto Rico follows the wage garnishment guidelines established by the federal government. Creditors may attach 25% of disposable income or 30 times the amount of minimum wage in a garnishment order. To learn more, visit the Puerto Rico Department Of Labor And Human Resources or call (787) 754-2100 for more information.
Rhode Island: This state adheres to federal and exemptions for the garnishment of wages. Creditors may garnish 25% of expendable earnings or the amount by which your disposable earnings for the week exceed 30 times the rate of minimum hourly wage. Contact the Rhode Island Department Of Labor And Training at (401) 462-8000 to learn more.
South Carolina: This state does not allow creditors to attach the wages of a debtor. Garnishments are only permitted for the collection of child support and alimony payments, taxes in arrears, and defaulted student loans. Creditors are permitted to create liens against the property of a debtor. For more information contact the South Carolina Department Of Labor, Licensing And Regulations at (803) 896-4300.
South Dakota: This state enacts a wage garnishment policy more lenient than that of the federal government. A creditor may garnish 20% of expendable earnings, but only for a 60-day period. Renewals must be applied for every two months. Learn more by contacting the South Dakota Department Of Labor at (605) 773-3682.
Tennessee: This state follows the federal garnishment rules of allowing 25% of expendable income to be garnished, or expendable income in excess of 30 times the current rate of minimum wage. A $2.50 per week exemption is allowed for each dependent child under the age 16 in the debtor’s household. Learn more by calling the Tennessee Department Of Labor And Workforce Development at (615) 741-2257.
Texas: Wages cannot be garnished with the exception of child support payments. Income that is not a wage can be garnished with the exception of Social Security benefits. Learn more by contacting the Texas Workforce Commission at (512) 475-2670.
Utah: This state issues a flat fee of $142.50 per week of expendable earnings for garnishment of a debt. Learn more by contacting the Utah Labor Commission contact number at (801) 530-6800.
Vermont: In this state, 75% of debtor’s wages are exempt from garnishment. A creditor may garnish 25% of a debtor’s disposable wages. Learn more by contacting the Vermont Department Of Labor at (802) 828-4000.
Virginia: The state abides by the federal garnishment rules. A creditor may garnish 25% of expendable earnings, or any amount of earnings in excess of 30 times the minimum hourly wage. Learn more by visiting the Virginia Department Of Labor And Industry at (804) 371-2327.
Virgin Islands: Garnishments may be levied at an amount of 10% of gross wages. To learn more visit the Virgin Island Department Of Labor or call (340) 776-3700.
Washington: The state follows the standard of the federal government on regulating wage garnishments. A creditor may garnish 25% of expendable earnings or thirty times the federal minimum wage. Learn more by contacting the Washington Department Of Labor And Industries at (360) 902-4200.
West Virginia: This state allows the lesser of 20% of expendable income or 30 times the minimum hourly rate for wage garnishment. For more information contact the West Virginia Division of Labor at (304) 558-7890.
Wisconsin: In this state, 80% of net pay is exempt from debtor garnishments. The state allows garnishment of 20% of disposable income for debt collection. For more information contact the Wisconsin Department Of Workforce Development at (608) 266-6861.
Wyoming: In this state, 25% of disposable income is subject to garnishment. If a debtor is ordered to pay child support, 65% of the disposable income is reserved and cannot be garnished. To learn more, contact the Wyoming Department Of Employment at (307) 777-7261.