• The WHD stipulates garnishment amounts involving money owed to creditors.
• If a discrepancy exists between the CCPA and a state’s wage garnishment law, an employer must adhere to the regulation that results in a smaller garnishment.

Although employers may have to address a variety of garnishment types, the U.S. Department of Labor (DOL) Wage and Hour Division (WHD) does not address many of them. However, the agency does address creditor payments and child support under the Consumer Credit Protection Act (CCPA).

For creditor debts, the garnishment amount must be the lesser of:

• Twenty-five percent of disposable earnings, or
• The amount by which disposable earnings are greater than 30 times the federal minimum hourly wage (essentially, the equivalent of 30 hours per week at minimum wage).

This limit applies regardless of how many creditor garnishment orders an employer receives. However, states may adopt different limits. For instance, in California, garnishments are limited to the amount above 40 times the state minimum wage (so a California employee must always receive the equivalent of 40 hours at state minimum wage).

In cases of court orders for child support or alimony, the CCPA 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 5 percent may be garnished for support payments that are more than 12 weeks in arrears. The restrictions noted previously do not apply to support order garnishments.

The CCPA specifies that garnishment restrictions (i.e., limitations on how much of an employee’s disposable earnings may be garnished) do not apply to bankruptcy court orders and debts due for federal and state taxes, nor do they affect voluntary wage assignments.

The Debt Collection Improvement Act authorizes federal agencies or collection agencies under contract with them to garnish up to 15 percent of disposable earnings to repay defaulted debts owed to the U.S. government.

The Higher Education Act authorizes the U.S. Department of Education’s guaranty agencies to garnish up to 10 percent of disposable earnings to repay defaulted federal student loans. The amount of any such garnishment in total is also subject to provisions of the CCPA, but not state garnishment laws. If the total of all garnishments exceeds 25 percent of disposable earnings, questions regarding the garnishment amount should be referred to the agency initiating the withholding action.

Relationship to state, local, and other federal laws

If a state wage garnishment law differs from the CCPA, the employer must observe the law resulting in the smaller garnishment, or the more protective law regarding discharge of an employee because of a garnishment for more than one debt. In other words, the garnishment law that most protects the employee must be followed.

Penalties and sanctions

Violations of the CCPA 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 DOL may initiate court action to restrain violators and remedy violations. Employers that willfully violate 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.

Furthermore, each state has its own procedures for execution of garnishments that creditors and employers must follow. Employers that fail to follow those procedures do so at their own peril. If an employer fails to withhold an amount to which the creditor is lawfully entitled, the employer may be held liable to pay the amount not withheld, plus interest (with no recourse against the employee).

Conversely, if the employer withholds amounts to which the creditor is not entitled, the employer may be held liable to repay the employee the amount withheld plus interest and, potentially, penalties provided by federal and state wage-hour laws.