While most creditors must first receive a judgment from a court before they can garnish an employee's wages, federal entities such as the United States Department of Education or the Internal Revenue Service can issue a garnishment without a court order. While the instructions are usually on the writ of garnishment, being aware of the rules that apply to wage garnishments can help you comply with the terms.
Federal Calculation of Garnishment
If the state does not have a separate garnishment law, the default rule is the federal calculation. According to the Consumer Credit Protection Act, an employee's wages can be garnished by up to 25 percent of his disposable wages or by the amount in excess of 30 times the federal minimum wage limit.
Disposable wages is defined as the amount of wages left over after deductions are taken out for state income taxes, federal income taxes, federal Social Security and deductions for certain types of retirement systems. The lower amount of these options is the one that applies. To determine which one applies, run the math on both.
For example, if the employee has weekly disposable wages of $425, 25 percent of this amount would be $106.25. The minimum wage calculation would yield $217.50. Therefore, the 25-percent figure would be used since it is the lower amount.
State Calculation of Garnishment
If there is a difference in the state or federal law, the rule that results in the lower amount of garnishment is used. For example, Connecticut's rule is that the garnishment must be the lower of 25 percent of the employee's disposable wages or the amount that wages exceed 40 times the state or federal minimum wage. Illinois' rule is that the lower of the disposable pay in excess of 45 times the minimum wage or 15 percent of weekly gross pay can be garnished.
Calculate the state rule at the same time that you calculate the federal rule to determine which one results in the lower garnishment.
Exempted Amount for Wage Garnishment
Wages cannot be garnished if they do not exceed a minimum amount. Based on the federal rule, an employee's wages cannot be garnished if he earns less than $217.50 a week in disposable earnings. In Illinois, the employee's disposable earnings must be more than $371.25 for the employee's wages to be garnished.
Garnishment for Child Support
The Credit Consumer Protection Act authorizes an employer to withhold up to 50 percent of an employee's wages for child support if the debtor has other dependents, or 60 percent if she does not. If the original support ordered is 12 or more weeks in arrears, the Credit Consumer Protection Act permits up to 55 percent of wages to be withheld if the debtor has no other dependents, or 65 percent of wages if she does.
Garnishment Calculation Tools
To simplify the process, employers and employees may wish to use a calculator to do the work for them. The Bureau of the Fiscal Service maintains a garnishment calculator and a garnishment worksheet that you can use to figure the proper amount of a garnishment.
- U.S. Department of Labor: Fact Sheet #30: The Federal Wage Garnishment Law, Consumer Credit Protection Act's Title 3 (CCPA)
- Bureau of the Fiscal Service: Administrative Wage Garnishment (AWG) Garnishment Calculator
- Bureau of the Fiscal Service: Wage Garnishment Worksheet
- Social Security Administration: GN 02410.215 How Garnishment Withholding Is Calculated
- Illinois Legal Advocate: Money and Property Exempt from Judgments
- Connecticut General Assembly: Chapter 906
- FindLaw: Consequences of a Student Loan Default