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Based on the number of questions I get, garnishing wages seems to be a mystery to many out there. I will attempt to de-mystify the process as best as I can, but remember that each case has the potential to be different from the next, and the best thing to do is ask an HR professional for help.

Wage Garnishment is the act of an employer withholding the earnings of an individual for the payment of a debt as a result of a court order.

Title III of the Consumer Credit Protection Act (15 USC § 1647 et. Seq.(PDF); 29 CFR Part 870) is the federal law covering garnishments.
It isn't necessary to remember the legal citation, but understand that garnishment is covered by federal law.

It is also important to know the definition of disposable earnings to better understand garnishment. Disposable earnings is the amount of earnings left after legally required deductions (e.g., federal, state, and local taxes, Social Security, unemployment insurance) have been made. Deductions not required by law (health and life insurance, charitable contributions, and retirement contributions) are not subtracted from gross earnings when the amount of disposable earnings for garnishment is calculated.

Basically there are two different types of garnishments that we routinely see; the first type I'll call consumer debt, while the second type is for child support or alimony.

Consumer debt: Title III limits the amount of earnings that may be garnished in any one week or pay period to the lesser of 25 percent of disposable earnings or the amount by which disposable earnings are greater that 30 times the federal hourly minimum wage.

Example 1: Minimum wage is $7.25 per hour. So 30 x 7.25 equals $217.50

If we have an employee who has "disposable earnings" of $800.00 then

25% of $800 is $200.

In this example, the maximum we could withhold for the garnishment would be $200. It is the lesser amount.

Example 2: An employee with disposable earnings of $1,000, then 25% of $1,000 equals $250.00.
In this case, the $217. 50 would be the lesser amount and therefore the maximum amount of the garnishment.

Garnishment for child support or alimony: Title III allows up to 50 percent of an employee's disposable earnings to be garnished if the employee is supporting a current spouse or child, and up to 60 percent if the employee is not doing so. An additional 5 percent may be garnished for support payments over twelve weeks in arrears.

Lastly, Title III specifies that garnishment restrictions do not apply to bankruptcy court orders and debts due for federal and state taxes.

I hope this helps out, but remember that all I have talked about in this article is the federal law. State laws may vary from this a little so if you are faced with an employee garnishment don't hesitate to call us at ProValue and ask for help.

Jim Warner can be reached by phone at (580)348-0048 or by email at jwarner@provaluellc.com.