Garnishment

Scope

Title III 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). The law applies in all 50 states, the District of Columbia, and all U.S. territories and possessions.

Regulatory citations

• None

Key definitions

• Wage garnishment: Occurs when an employer withholds earnings for payment of a debt as the result of a court order or other equitable procedure.
  • Most garnishments are made by court order.
  • Other legal or equitable procedures include IRS or state tax collection agency levies for unpaid taxes and federal agency administrative garnishments for non-tax debts owed the federal government.
• Disposable earnings: Those left after legally required deductions (e.g., taxes, Social Security, unemployment insurance, and state employee retirement systems). Deductions not required by law (e.g., union dues, health and life insurance, and charitable contributions) are not subtracted from gross earnings when calculating disposable earnings for garnishment purposes.

Summary of requirements

• Voluntary wage assignments. Wage garnishments do not include voluntary wage assignments, when employees voluntarily agree that their employers may turn over a specified amount of their earnings to a creditor or creditors.
• Debt. Title III prohibits discharging an employee because the employee’s 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.
• Disposable earnings. Title III also protects employees by limiting the garnishment in any workweek or pay period to the lesser of 25 percent of disposable earnings, or disposable earnings greater than 30 times the federal minimum hourly wage. This limit applies regardless of how many garnishment orders an employer receives.
• Child support or alimony. 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.
• Bankruptcy. Title III specifies that garnishment restrictions do not apply to bankruptcy court orders, debts due for federal and state taxes, or voluntary wage assignments.
• State laws. If a state wage garnishment law 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.
• Partial compensation. In most cases, Title III gives wage earners the right to receive at least partial compensation for services despite wage garnishment.
• Violations. The Wage and Hour Division accepts complaints of alleged Title III violations. Violations 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. Employers who willfully violate the discharge provisions may be prosecuted criminally and fined up to $1,000, or imprisoned for not more than one year, or both.