Understanding Wage Garnishment Laws & Title III Restrictions
A **wage garnishment** is a legal procedure in which an employer is ordered by a court or government agency to withhold a portion of an employee's earnings for the payment of a debt (such as unpaid credit cards, student loans, taxes, medical bills, or child support). Because garnishments directly affect an employee's livelihood, federal and state laws place strict caps on how much an employer can deduct.
What Represent "Disposable Earnings"?
Garnishment caps are calculated strictly based on **disposable earnings**, not gross income. This is a common legal distinction:
- Legally Required Deductions: These are subtracted from gross earnings to find disposable earnings. They include Federal, State, and Local income taxes, FICA (Social Security & Medicare), and state-mandated disability or unemployment taxes.
- Non-Required Deductions: These are **NOT** subtracted from gross earnings. Optional deductions (such as retirement 401k savings, health insurance premiums, union dues, or charitable giving) are included in disposable earnings calculations.
Example: If an employee has weekly gross pay of $800, tax withholdings of $150, and voluntary 401(k) deductions of $50:
• Legal disposable earnings = $800 - $150 = $650. (The voluntary $50 401k contribution does not lower the garnishment basis).
Federal Title III CCPA Consumer Debt Caps
For ordinary consumer debt (credit cards, medical debt, student loans), the maximum weekly garnishment under Title III of the Consumer Credit Protection Act (CCPA) represents the **lesser** of two values:
- 25.00% of the employee's weekly disposable earnings.
- The amount by which weekly disposable earnings exceed **30 times the federal minimum wage** (currently $7.25 × 30 = $217.50).
Federal Garnishment Scale (Weekly):
- Disposable earnings **under $217.50:** Garnishment is **$0** (100% protected).
- Disposable earnings between **$217.50 and $290.00:** The employer can only garnish the amount over $217.50 (e.g. if disposable is $250, maximum garnishment is $32.50).
- Disposable earnings **over $290.00:** The standard flat 25% cap activates.
Child Support & Alimony Garnishment Limits
Child support orders are subject to much higher limits than standard consumer debt under the CCPA:
- 50.00% of disposable earnings if the worker is currently supporting another spouse or dependent child.
- 60.00% of disposable earnings if the worker is not currently supporting another spouse or dependent child.
- An **additional 5.00%** may be added to both limits (making them 55% or 65%) if the child support payments are outstanding or in arrears for more than 12 weeks.
State Law Protections (The Texas Ban)
Under federal guidelines, when state and federal garnishment laws conflict, **the law providing the greatest protection (the lowest garnishment amount) must be followed by the employer**:
- Complete Bans: States like **Texas**, **Pennsylvania**, **North Carolina**, and **South Carolina** completely ban wage garnishment for standard consumer debt. In these states, wages can only be garnished for child support, taxes, or federal student loans.
- California: Under CA law, garnishments are capped at the lesser of 25% or the amount by which weekly disposable earnings exceed 40 times the CA state minimum wage, making it highly protective for low-wage earners.
- New York: Capped at the lesser of 10% of gross wages or 25% of disposable earnings (if disposable exceeds 30x the state minimum wage).