The wage garnishment provisions under Title III of the Consumer Credit Protection Act (CCPA) protect employees from discharge by their employers because their wages have been garnished
for any one debt, and it limits the amount of an employee's earnings that may be garnished in any one week. CCPA also applies to all employers and individuals who receive earnings for personal
services (including wages, salaries, commissions, bonuses and income from a pension or retirement program, but ordinarily not including tips).
Basic Provisions/Requirements
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. Title III prohibits an
employer from discharging an employee because his or her earnings have been subject to garnishment for any one debt, 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.
Title III also protects employees by limiting the amount of earnings that may be garnished in any workweek or pay period 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 $5.85 per hour effective July 24, 2007; $6.55 per hour effective July 24, 2008; and $7.25 per hour effective July 24,
2009.
In 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. The restrictions noted in the preceding paragraph do
not apply to such garnishments.
"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
In most cases, Title III gives wage earners the right to receive at least partial compensation for the personal services they provide despite wage garnishment. This law also prohibits an
employer from discharging an employee because of garnishment of wages for any one indebtedness. The Wage and Hour Division of the Employment Standards Administration accepts complaints of
alleged Title III violations.
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. Where violations cannot be resolved through
informal means, the Department of Labor may initiate court action to restrain violators and remedy violations. 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 state wage garnishment laws 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.
Common Questions And Answers On Bank Account Seizure And Wage
Garnishment