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Defining Wage Garnishment
According to US Legal, an administrative wage garnishment is "According to 22 CFR 34.4 [Title 22. Foreign Relations; Chapter I Department of State; Subchapter D. Claims and Stolen Property; Part 34. Debt Collection; Subpart A. General Provisions] the term administrative wage garnishment means “the process by which a Federal agency orders a non-Federal employer to withhold amounts from a debtor's wages to satisfy a debt owed to the United States." A wage garnishment order can be for taxes owed to the federal government, taxes owed to a state government, child support (or alimony) payments, payments on a bankruptcy claim or for other debts. Nearly any creditor can go to court and request that a debtors wages be garnished. What most people wonder is how much can a wage garnishment take from your paycheck? The answer to this is not as black and white as the question and here are some of the reasons:
A) Some states prohibit wage garnishment - North Carolina, Pennsylvania, South Carolina and Texas have laws in place that protect employees from wage garnishment. There are exceptions however. These exceptions include taxes, child support, student loans and court ordered restitution;
B) Limits are varied at state levels - The Department of Labor has specific rules in place to help make sure that an employee can still survive in spite of the fact that they have a wage garnishment. These rules are meant to protect the take home pay of an employee. Federal laws state that the employees disposable income may be garnished up to 25% for wage garnishments that are not related to taxes, student loans, child support and court ordered restitution. However, states may impose greater limits than the federal law. In this case the federal law is clear - that the garnishment may not exceed whichever option will result in a lower amount being withheld.
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Wage Garnishment and Disposable Income
Since the wage garnishment laws are based on disposable income, the answer to the question how much can a wage garnishment take from your paycheck will vary from person to person. Disposable income is classified as any income that a person receives after taxes and insurance payments are deducted from their paychecks. This amount excludes most voluntary deductions such as 401(k) plans, heath care spending plans and other similar voluntary deductions. An employee who is facing wage garnishment should carefully review their disposable income in conjunction with the federal laws regarding garnishment (as well as their individual state laws) so that they understand the maximum wage garnishment that is allowed.
- Wage garnishment is not strictly for employees. Independent contractors may also face wage garnishment;
- Certain debts such as taxes, child support payments, student loan payments and court ordered payments may have different requirements;
- There may be allowances for certain debts if the person facing wage garnishing is the sole support of a child;
- Employers may not fire an employee for one wage garnishment but may be allowed to do so if there is more than one in a twelve month period
Depending on individual circumstances, there may be options to wage garnishment including working out an acceptable payment plan. Any employee who is facing a potential wage garnishment should reveiw their state laws as well as federal laws. It is also important to note that for taxes, the only requirement on notification is that the taxing authority issue a letter to the last known address. There is no requirement that the person receive such notification.
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Department of Labor:
- Wages and Hours Worked: Wage Garnishment
- Fact Sheet #30: The Federal Wage Garnishment Law, Consumer Credit Protection Act's Title 3 (CCPA) (PDF)
How Much Money is Allowed to be Taken From Your Paycheck For Wage Garnishment?
There are things that you can do if you are subjected to wage garnishment. Make sure you know your rights.