Wage Garnishment; Know Your Responsibilities When it Comes to Withholding Employee Earnings

Wage garnishment can be a scary topic - nobody wants their income affected or the embarrassment of a collection taken to their employer. Fortunately for everyone involved, when it comes to wage garnishment, employees have rights designed to protect them and employers have clear guidance on their withholding responsibilities. To help you understand the topic better, here is a quick guide on information about garnishing employee wages.

What is wage garnishment?

Wage garnishment occurs when an employee's earnings are legally required to be withheld by their employer. Examples of wage garnishment include debts collected by the Internal Revenue Service (IRS) or a state tax collection agency.

How does the Consumer Credit Protection Act (CCPA) protect employees?

The act generally protects employees in two ways:

1. The act prohibits discharging an employee for any one debt. Even if numerous collection proceedings have taken place against an employee, their employer cannot take action against that employee's job if the proceedings all related to a single debt.




2. The act limits the amount of earnings garnished from an employee in any one workweek or pay period. The garnished amount must equal the lesser of either 25% of disposable earnings or the amount by which their disposable income exceeds 30 times the federal minimum wage ($7.25 per hour effective July 24, 2009). Earnings held after taking all legally required deductions are considered disposable income.

The act incorporates additional exceptions. For example, limits on wage garnishment amounts may not apply for issues such as child support payments, bankruptcy collections, or federal or state tax requirements. For more information, visit the Department of Labor's guidance on wage garnishment basic provisions and requirements.

Who is covered by the CCPA protections?

The laws that govern wage garnishment through the CCPA are all inclusive. They cover all employers and employees who earn compensation for personal services. Compensation includes:

• Wages
• Salaries
• Commission
• Bonuses
• Pension Program Payments
• Retirement Program Payments

Where can I find more information on meeting the wage garnishment standards of the CCPA?

The Department of Labor provides compliance assistance on the CCPA as well as specific wage garnishment assistance. For more information, utilize their resources:

• Consumer Credit Protection Act Compliance Assistance
• Federal Wage Garnishment Law Fact Sheet
• Wage and Hour Division
• Local Wage and Hour Division Offices

Do you have more questions about wage garnishment? Ask them in the Community.