Checklist: Compliance with a wage garnishment order (USA)

Introduction

This checklist will assist in-house counsel and private practitioners with understanding how to comply with a wage garnishment order. It sets out the key issues for organizations to consider when determining the appropriate action to take in response to such an order.

This checklist addresses the following steps:

1. Understanding the meaning and purpose of wage garnishment
2. Understanding the legal landscape relating to wage garnishment
3. Processing a wage garnishment order

The checklist is presented as a list of requirements that can be checked off as they are addressed. At the end of the document, there are explanatory notes corresponding to each requirement in the checklist.

This checklist can be read in conjunction with the following How-to guides: Overview of US employment law (USA), How to understand and comply with wage and hour laws (USA), and Checklist: Compliance with child or spousal support orders (USA).

Step 1 – Understand the meaning and purpose of wage garnishment

Step 2 – Understand the legal landscape relating to wage garnishment

Step 3 – Process a wage garnishment order

Step 1 – Understand the meaning and purpose of wage garnishment

1.1 Understand the definition and purpose of wage garnishment

Wage garnishment is a process, usually as a result of a court order, requiring an employer to withhold a portion of an employee’s earnings for payment of some form of debt to a creditor. A levy, by contrast, typically involves gaining access to a debtor’s bank accounts.

Examples of the types of debts that can result in wage garnishment include unpaid spousal or child support, student loans, taxes, and various forms of consumer debt such as credit card debt. Wage garnishment – also referred to as wage attachment – can serve an important purpose by providing a remedy for creditors who are unable to recover the money that is due to them.

1.2 Understand the types of wage garnishment

The Internal Revenue Service (IRS) has the power to seize an individual’s property to recover unpaid taxes. This may be accomplished in a variety of ways. Tax levies typically focus on assets held in bank accounts. However, the IRS may also garnish an individual’s wages, salary, or other compensation (including fees, bonuses, commissions, and similar items). The IRS does not need a court order to do so, but notice requirements do apply, and affected individuals usually have the right to a hearing. As further explained at step 2 below, other governmental agencies can also initiate wage garnishment without court orders.

Other creditors will usually have to obtain a court order for the garnishment, unless otherwise empowered by the law to garnish without a court order, typically after suing the debtor for non-payment of the debt and receiving a judgment in their favor.

1.3 Understand the employees to whom wage garnishment applies

Wages are typically defined as compensation earned by employees, so in many situations wage garnishment only applies to employees, and not to independent contractors. Unpaid debts of independent contractors can be secured via non-wage garnishments, which typically involve one-time seizures of certain assets.

However, the distinction between employees and independent contractors will not always be determinative when dealing with wage garnishment. For example, for child support orders, states use a form made available by the Office of Child Support Services (OCSS), a federal entity. The OCSS has indicated that employers who pay independent contractors must withhold child support payments from those payments (see OCSS website for further details).

State law may also allow garnishments to be imposed on independent contractors by including them in other relevant definitions. For example, Virginia law explicitly states that payments to independent contractors are included within its definition of ‘earnings,’ meaning that garnishment applies to independent contractors as well as employees. Whether independent contractors are subject to garnishment may also depend on the type of garnishment at issue, so a careful review of all relevant state laws is called for.

Step 2 – Understand the legal landscape relating to wage garnishment

In order to understand the law relating to wage garnishment it is important to consider both federal and state laws.

2.1 Review federal laws relating to wage garnishment

2.1.1 Title III of the Consumer Credit Protection Act

Title III of the Consumer Credit Protection Act (CCPA), also known as the Federal Wage Garnishment Law (codified at 15 USC 1671 et seq) provides certain protections for individuals who are subject to garnishment. Specifically, it forbids employers from terminating employees because their earnings are subject to garnishment for one debt. The protection does not apply if the employee’s earnings are subject to garnishment for more than one debt.

In addition, the CCPA limits the amount of earnings that can be garnished per week. ‘Earnings’ are defined as compensation paid or payable for personal services, and include wages, salaries, commissions, bonuses, as well as periodic payments from pension or retirement programs and payments from employment-based disability plans. Payments received in lump sums may be included if these are paid in exchange for personal services from the person receiving payment. This would include commissions, bonuses, or severance pay.

The maximum amount that may be garnished is usually based on an employee’s ‘disposable earnings.’ This is defined as the earnings left after deducting the employee's required payments, such as taxes, Social Security and Medicare contributions, child or spousal support, and mandatory retirement withholdings.

Typically, the weekly amount garnished may not exceed the lesser of:

• 25% of the employee’s disposable earnings; or
• the amount by which an employee’s disposable earnings are greater than 30 times the federal minimum wage (currently $7.25 an hour; 30 times $7.25 = $217.50).

The above example is provided in the Department of Labor fact sheet #30: Wage Garnishment Protections of the Consumer Credit Protection Act (CCPA), which provides numerous examples that illustrate the amounts that may be withheld for various earning levels.

Different limitations apply to the following:

• certain bankruptcy court orders;
• garnishments to recover state or federal tax debts; and
• garnishments pursuant to court orders for child support or spousal support (alimony).

For example, if the employee is not supporting another spouse or child, up to 60% of an employee’s disposable earnings can be garnished for court-ordered child or spousal support. This amount can increase if the employee is more than 12 weeks in arrears.

As outlined below, state law can also affect the amounts that can be withheld.

2.1.2 Family Support Act and Uniform Interstate Family Support Act

The Family Support Act (FSA) amended the Social Security Act (42 USC 666) to require states that receive certain federal funding to establish programs providing for the immediate (ie, automatic) withholding of income if a court has issued (post-1993) an order for child support or for both child and spousal support. An exception provides that wages are not to be immediately withheld either where there is ‘good cause’ for not doing so, or if the parties agree, in writing, to an alternative arrangement.

A related model law, the Uniform Interstate Family Support Act (UIFSA), also authorized direct income withholding from earnings. First introduced in the early 1990s, it was last amended in 2008 and has been implemented by all states. The UIFSA provides mechanisms for establishing and enforcing child support obligations in interstate cases. The UIFSA’s main underlying principle is that, once a child support order is entered, that order determines the child support obligation, and remains in effect if the parents or child move to another state. This allows for the withholding of income for child support across state lines without involving additional tribunals or child support agencies. If an employer nonetheless receives withholding orders from more than one state, the law of the state of the employee’s principal place of employment applies.

For more information on child and spousal support orders, see Checklist: Compliance with Child or Spousal Support Orders.

2.1.3 Debt Collection Improvement Act

The Debt Collection Improvement Act (DCIA) was enacted to maximize the collection of billions of dollars of delinquent non-tax debt owed to the government. Delinquent non-tax debt refers to any debt not related to an obligation under the Internal Revenue Code. The DCIA requires agencies to notify the Treasury Department of debts delinquent over 180 days for the purposes of administrative offset, and to refer such debts to Treasury for centralized collection action known as cross-servicing. The Act also authorizes federal agencies to administratively garnish the wages of delinquent debtors.

Administrative wage garnishment (AWG) allows a federal agency to order a non-federal employer to withhold up to 15% of an employee’s disposable income to pay a delinquent non-tax debt owed to the agency. The Treasury Department’s Fiscal Service can issue a wage garnishment order on behalf of the federal agency without first obtaining a court order. An employer subject to such orders must send the withheld amounts to the Fiscal Service for payment to the federal agency.

The AWG process is governed solely by federal law. Some exceptions apply. For example, the Fiscal Service does not garnish wages if an employee has filed for bankruptcy and an automatic bankruptcy stay is in effect. Moreover, wages cannot be garnished if a debtor has been in their current job for less than 12 months and was ‘involuntarily separated’ from their previous job.

2.2 Review state laws relating to wage garnishment

Organizations must keep in mind that state laws also govern wage garnishments.

2.2.1 State law applicability based on garnishment type

Many states have separate laws for different types of wage garnishments, such as those involving child support, student loans, or unpaid taxes. When dealing with partial exemption of employees’ wages from garnishment, some states follow federal guidelines while others apply different exemptions. This is often the case with consumer debt in particular. When state standards provide greater protection to employees than federal standards, the state standards will prevail. For example:

• Iowa follows federal guidelines in terms of the percentage of wages that can be garnished but also caps the aggregate amount that individual creditors can garnish during a calendar year. However, those caps do not apply to child support orders.
• Washington, when dealing with consumer debts, exempts the greater of 80% of disposable earnings or 35 times the state minimum wage ($16.28 per hour in 2024) from wage garnishment. It also imposes specific exemption amounts for private student debt.
• California uses a calculation that exempts the greater of a percentage of disposable earnings or a multiple of the state's minimum wage. Specifically, it exempts the greater of 80% of disposable earnings or 40% of the state's minimum wage. An overview of California’s minimum wages is located here.
• New York has a wage garnishment, or "income execution," law that provides greater protection for consumer debts than the federal law. A creditor can garnish the lesser of 10% of your gross wages or 25% of your disposable income, provided that this amount is above 30 times the state or federal minimum wage, whichever is greater. If your disposable income is below this threshold, it cannot be garnished at all.
• Texas is a rare exception to most wage garnishment rules. The state prohibits wage garnishment for most consumer debts, such as credit card balances, medical bills, or personal loans. However, the law provides that wages can be garnished for other types of debt, including court-ordered child support or spousal maintenance, federal student loans, and unpaid taxes.

2.2.2 State law prohibitions on garnishment

Some states prohibit wage garnishments in specific situations. Examples include completely prohibiting garnishment for consumer debts and providing exceptions for so-called ‘heads of household.’

States that forbid garnishment for consumer debts include North Carolina, Pennsylvania, South Carolina, Texas, and Maryland. Many other states permit garnishment for this kind of debt, but impose larger exemption amounts than apply to other categories of debt.

Some states limit, or completely prohibit, garnishing the wages of heads of household/family. This typically requires an individual to provide more than 50% of financial support for children or other dependents in order to be designated as the head of household or family. For example:

• in Florida, all disposable earnings of a head of family up to $750 a week are entirely exempt from garnishment, and earnings greater than $750 a week can be garnished only if the family head agrees to garnishment.
• Missouri generally, follows federal guidelines regarding exemptions but provides for stronger protection from garnishment for heads of a family.

2.3 Understand the interplay between the Consumer Credit Protection Act and state laws

The CCPA authorizes (in section 305) exemptions from its provisions limiting the extent of wages that can be garnished where the laws of that state provide ‘substantially similar’ restrictions on garnishment. The corresponding regulations explain that this typically applies where the state laws at issue cover every case of garnishment covered by the CCPA and provide the same or greater protection to individuals. They also spell out the procedure for obtaining such exemptions.

In practical terms, section 307 is more relevant. It provides that the CCPA does not annul, alter, affect, or exempt any person from complying with the laws of any state prohibiting garnishments or providing for more limited garnishments than are allowed under the Act. The Department of Labor has indicated that, as a result, provisions of state law that place greater restrictions on garnishments prevail over federal law.

2.4 Ensure relevant internal personnel are up to date on wage garnishment laws and regulations

The exact requirements applicable to wage garnishment – and, by extension, to employers who are confronted with wage garnishment orders – will vary based on what kind of debt is involved and which state laws apply. In addition, the amounts involved may change regularly, such as when a state’s minimum wage laws are adjusted. It is therefore essential for employers to ensure that internal personnel are up to date on the relevant laws and regulations. In many cases, it will also be necessary to obtain specialized legal advice.

Step 3 – Process a wage garnishment order

Receiving a wage garnishment order can be burdensome for employers. Exact requirements as to how to proceed will depend on what type of debt is involved, and on any specific requirements imposed by state law. Employers who receive a wage garnishment order should follow the steps set out below.

3.1 Review the wage garnishment order and the source of the order

Garnishment is typically prescribed via a court order or by a state or federal agency. If employers receive a court-ordered garnishment from the employee’s creditor, this will usually be accompanied by a specific form and supporting documentation, with different forms accompanying different types of garnishments. (For examples, see the forms California generally sends for wage garnishments and those for withholdings related to spousal support.)

As explained at 2.1 above, garnishments from federal agencies do not always require a court order. Federal agencies that initiate administrative wage garnishments, for example, will send out a wage garnishment order (on Form SF-329B) completed by the agency itself. In addition to that order, employers will receive a particular form (SF-329), a letter/notice to the employer (SF-329A), a wage garnishment worksheet (SF-329C), and an employer certification (SF-329D).

3.2 Confirm receipt of the order and intent to comply

The documentation sent to employers will specify a deadline by which they have to respond. This is usually within a certain number of days after receiving the order or within a certain number of days after the employee’s current pay period ends. Employers may be required to return a form to confirm compliance and provide information about their company and the employee. The latter will include information such as their employment status, their salary, and whether other wage garnishments have already been imposed on the employee.

3.3 Notify the employee to whom the garnishment order applies

The employee will likely have separately been notified of the wage garnishment by the creditor; however, the employer must also notify them. In addition, the employer must inform the employee of the amount to be withheld throughout the duration of the garnishment. This information is often incorporated into issued pay stubs.

3.4 Withhold specified wage amounts

Employers who receive wage garnishment orders must act very quickly – essentially, immediately – to start withholding the amounts specified in the order. The timescale for employers to comply will be specified in the order and related documents. It can be as soon as five days after receiving the order or may be required with the employee’s next paycheck.

An employee may challenge the garnishment order, but this generally does not change the employer’s obligation to comply with it. If the employee files for bankruptcy, wage garnishment may be temporarily put on hold, though this will not usually be the case for child support.

3.5 Accurately calculate and track wage garnishments

Calculating and keeping track of wage garnishments can be difficult. As noted above, both federal and state law impose restrictions on the amounts that can be garnished and determining what forms of compensation are subject to garnishment can also be difficult. In addition, some employees may be subject to multiple garnishment orders, requiring employers to make decisions regarding which order to prioritize.

Garnishment orders are typically accompanied by garnishment calculation worksheets. Nonetheless, many employers hire payroll processing services or use specific software to handle the calculations. Most states allow employers to deduct at least small processing fees from paychecks that include garnishments. These vary from state to state and can range from as little as $1 per payment up to $25 for the first payments withheld.

Employers can face possible penalties for missed payments, late payments, and for miscalculations, and these vary both based on the state and type of debt involved. For example, Illinois imposes a penalty of $100 for each day an employer knowingly fails to forward withheld child support payments to the relevant entity. Where employers fail to respond to a garnishment order, they can be held in contempt of court, and in many states may incur penalties as high as the relevant debt involved. While any violation of the law – deliberate or not – is punishable, some agencies may exercise their discretion not to penalize an employer for an honest mistake.

Additional resources

Department of Labor, Fact Sheet #30: The Federal Wage Garnishment Law, Consumer Credit Protection Act's Title III (2020)
Department of Labor, Employment Law Guide, Wages and Hours Worked: Wage Garnishment (2016)
Administration for Children & Families (ACF), Department of Health & Human Services,
Income Withholding for Child Support: Techniques for Effective Management of Program Operations (TEMPO)

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