Garnishment of wages, also known as wage garnishing, is a legal procedure by which the courts take a portion of an employee’s earnings in order to pay back a debt owed by the employee. Wage garnishment is one of a number of methods that creditors may choose in order to recover the money they are owed from a delinquent debtor.
Wage garnishment is overseen by the Wage and Hour Division (WHD) of the U.S. Department of Labor. The WHD ensures that the wage garnishment is carried out in accordance with the court’s orders and does not violate the protections afforded to the employee by the Consumer Credit Protection Act (CCPA). The CCPA serves to protect the interests of the employee and their financial security by restricting the amount of income that can be garnished at any one time as well as considering hardship when garnishing.
Some of the most common causes of wage garnishment are unpaid debts or fines such as alimony, child support, credit card debt, consumer debts, or student loans. Once a wage garnishment has been levied against an employee, their earnings will continue to be garnished until the debt is settled or until some other resolution, such as bankruptcy, resolves the creditor’s interests.
Wage garnishment can seem like an insurmountable blow to an employee’s delicately balanced financial situation. However, there are some safeguards in place in order to ensure that employees are still able to live a dignified life, even under wage garnishment. Title III of the CCPA handles the limits and protections that are afforded to an employee who is undergoing wage garnishment.
Title III has jurisdiction in all states and territories of the U.S. and protects everyone who receives personal earnings. Under Title III, an employer cannot fire an employee whose earnings are the subject of garnishment for a single debt. This protection is very narrow and hinges on the term “single debt.” If an employee has “second or subsequent debts,” the employer is not prohibited from firing the employee.
Title III also controls what may be garnished and how much. Title III allows the garnishment of an employee’s wages to be limited depending on the compensation amount and nature of the compensation.
The CCPA states that all earnings for the employee’s services are garnish-able including:
When determining whether a payment qualifies as “earnings” under the CCPA, the WHD considers whether the employer made the payment for the employee’s services. This means that if the CCPA determines that an employer paid their employee for a reason other than for personal services that the employee delivered, the earnings are not garnish-able.
Additionally, the CCPA can only collect from an employee’s “disposable earnings.” Disposable earnings is an amount left over after all legally required deductions have been made such as taxes, social security, medicare, and any legally mandatory retirement contributions.
Other deductions like wage assignments, health and life insurance, or union dues are not usually deducted by CCPA inquiries. Regardless of the amount of garnishments or deductions applied, Title III of the CCPA limits total garnishment amounts at either:
If an employee does not have more disposable earnings than the federal minimum wage limit, then the employee does not have their wages garnished.
In certain special circumstances of bankruptcy, or in the case of federal or state tax debts, the garnishment caps of Title III may not apply.
If you have had your wages garnished, but your employer discharged you or you had more than the limit garnished from your wages, you may be able to file a lawsuit to seek justice. In order to do so, you will need an experienced Employment Law attorney.
An Employment Law attorney will be able to use their legal expertise, trial tactics, and host of expert witnesses to zealously advocate for your case to get you the best possible outcome. With their knowledge of the CCPA, and Employment Law attorney will be able to demonstrate any wrongdoing in the garnishment of your wages and fight to get you the outcome you deserve.