Calculating an allowable wage garnishment amount can present a challenge, especially when an employee is subject to multiple orders.
Wage garnishment orders require employers to withhold specific amounts of an employee’s disposable earnings—the amount of earnings leftover after legally required deductions are made—and transfer those dollars over to the garnishing creditor. For employees with multiple debts, employers may receive multiple such orders. The question then becomes, “Who gets paid first?”
Typically, the answer is straight forward. Employers should pay creditors based on the order in which their wage garnishment orders were received. It doesn’t matter when the debt or default in payment occurred, only the sequence in which the order was validly served on the employer. While wage garnishment laws place no limit on the number of creditors that can simultaneously submit orders, there is a limit to the total amount that can be garnished.
Calculating Garnishment Amounts
Title III of the Consumer Credit Protection Act (CCPA) sets the maximum amount that can be garnished in any workweek or pay period, regardless of the number of orders an employer receives. The weekly amount for ordinary garnishments, such as garnishments for student loans, cannot exceed the lesser of two figures:
·Twenty-five percent of the employee’s disposable earnings, or
·The amount by which those earnings are greater than 30 times the federal minimum wage.
With the current minimum wage of $7.25 an hour, this means that for a weekly pay period, there can be no garnishment (for ordinary garnishments) if disposable earnings are $217.50 ($7.25 x 30) or less. However, if disposable earnings are any amount above $217.50 but less than $290, the amount above $217.50 can be garnished. For disposable earnings of $290 or more, a maximum of 25 percent can be garnished.
The Department of Labor (DOL) has a helpful chart that provides the parameters and calculations for the same three possibilities for pay periods that extend beyond a week (biweekly, semimonthly, and monthly).
For non-ordinary garnishments like child support and alimony, the cap under the CCPA changes. The maximum amount of wages that can be garnished increases to 50 percent of disposable income if the employee is supporting another spouse or child (60 percent if not). This holds true regardless of the number of such garnishment orders an employee may have.
Additionally, in multiple wage garnishment scenarios where at least one order is related to support and one is not, child and spousal support orders should take priority over other debt, regardless of when the orders were submitted. On the other hand, if all orders are support related, then the sequence of received orders rule stands.
Texas Garnishment Laws
In contrast to many other states and federal law, Texas imposes unique limitations on creditors looking to garnish an employee’s wages. In general, the only types of debts that can be garnished are unpaid federal student loans, income taxes, child support, alimony, and certain other governmental debts like fines and penalties. Garnishment notices for other types of debts like credit card debt or unpaid medical bills can be ignored as those should be pursued by the creditors through other collection efforts.
Under Texas law, an employer doesn’t have the ability to demote, reprimand, terminate, or decline to hire an employee due to a garnishment. This is in contrast to federal rules, whereby employers have the ability to terminate an employee if there are two or more debts in the same year.
Wage garnishment scenarios vary from easy to complex depending on any given set of factors. Employers should have processes in place to help ensure adherence to all applicable rules for all aspects of wage garnishment. Understanding which laws apply to which aspects of wage garnishment will be paramount to complying with orders.
Additional HR Services resources related to wage garnishment include the following:
Keith McLemore joined HR Services in 2015 and assists districts with compensation planning and development. He has 17 years of experience traveling the state supporting public education employees.
McLemore received a bachelor’s degree from Southwestern University and a master’s degree from Texas Tech University, both with a focus on research analysis and design. He is a SHRM-CP.
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