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Paycheck Deductions and Wage Garnishment

Paycheck deductions and wage garnishments are regulated by federal and state laws, with the U.S. Department of Labor providing essential guidelines. Paycheck deductions are amounts withheld from an employee's pay. This includes things like approved pension contributions and health care expenses. Wage garnishment laws allow a creditor who obtains a court order to require your employer to set aside part of your paycheck and send this directly to your creditor.

Limits on Wage Garnishment

To garnish a worker's wages, a creditor usually must obtain a court judgment. The judgment must state that they're owed money or that the worker has defaulted on a debt. Wage garnishment orders are usually the result of unpaid taxes, defaulted student loans, defaulted credit card debt, or unpaid child support.

If a judge approves a wage garnishment order, you'll generally receive some type of written notice. This document should contain information about the appeals process. If you want to appeal the garnishment order, you may need to do so quickly. If you want assistance in this process, you may want to seek out the help of an experienced labor attorney.

The federal Consumer Credit Protection Act (CCPA) limits the amount an employee's wages can be garnished. These limits apply to most personal earnings. Personal earnings include wages, salaries, commissions, bonuses, and pension or retirement income. The CCPA also protects employees from being terminated because of a single garnishment. But the CCPA doesn't protect an employee from being fired because of multiple or subsequent garnishments.

Ordinary Garnishment

Ordinary garnishments are those not executed for alimony, bankruptcy, taxes, or debts to the federal government, such as student loans. Garnishment applies to your net income. This is the amount of an employee's income left after required payroll deductions such as taxes and Social Security contributions. Earnings contributed to deductions not required by law, such as contributions to a pension or life insurance policy, still count as part of your gross income, even if they're removed directly from your paycheck.

For ordinary garnishment, the weekly garnishment amount may not exceed the lesser of:

  1. 25% of the employee's disposable earnings; or
  2. The amount of an employee's disposable earnings that are greater than 30 times the federal minimum wage (at a federal minimum wage of $7.25 an hour in 2024, this amount is $217.50)

Student Loans and Federal Debts

Non-tax debts owed to the federal government are governed by separate laws with lower limits on what can be garnished. Government agencies, or collections companies working for them, are allowed to garnish up to 15% of a worker's gross earnings for non-tax debts owed to the government. The Department of Education may also garnish up to 15% of gross earnings to repay defaulted federal student loans.

Child and Spousal Support

The limits established by the CCPA for ordinary garnishment don't apply to garnishments for child or spousal support. Up to 50% of gross income can be garnished for child support if the worker is supporting a current spouse or child who isn't the subject of the child support order. If the worker isn't supporting another spouse or child, up to 60% of gross income can be garnished. An extra 5% can be taken if support payments are more than 12 weeks behind.

Paycheck Deductions

In addition to garnishments paid to third parties, some employers may take paycheck deductions. Federal law prevents some types of deductions when these would reduce an employee's wage below the minimum wage. Under the Fair Labor Standards Act, an employer may not deduct the cost of items that are primarily for the benefit of the employer, such as uniforms or tools, if this causes the employee's wage to fall below minimum wage. For example, if it would cause an employee to make less than minimum wage, an employer may not:

  • Make an employee reimburse an employer for a damaged tool or cash shortage
  • Require that employees pay for customers who walk out on bills
  • Require an employee to purchase or maintain tools or uniforms for the job

If the deductions don't result in an employee making less than minimum wage, they aren't prohibited by federal law.

Get Legal Help With Your Questions About Paycheck Deductions and Wage Garnishment

If your income is subject to wage garnishments or you're experiencing questionable paycheck deductions, you'll want to learn about your rights under the law. The good news is that you can contact a qualified employment attorney. They can explain how federal and state laws apply to your situation.

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