With the COVID-19 pandemic still in full swing in the United States and an unprecedented number of layoffs taking place across the country, financial security is more important than ever. Yet in some specific cases, you may find your paycheck withheld by your company through a process known as wage garnishment.
What Is Wage Garnishment?
According to the U.S. Department of Labor, wage garnishment is “a legal procedure in which a person’s earnings are required by court order to be withheld by an employer for the payment of a debt such as child support.” It’s important to understand why your wages might be garnished, how employers calculate wage garnishment and how to stop wage garnishment.
Why Might Your Wages Be Garnished?
Neighborhood Trust Financial Partners reports that nearly 9.5 million Americans have their wages garnished by their employer. There are a number of different reasons in which wage garnishment can occur legally. These include defaulted student loans or car loans, debt owed to a credit card company, failure to pay child support or alimony or unpaid taxes.
That list is not comprehensive; when it comes to determining which type of debts may be eligible for wage garnishment, just about anything is eligible since a debt is a debt.
How Is Wage Garnishment Calculated?
Exactly how much money can be garnished from your paycheck? Title III of the Consumer Credit Protection Act specifies a maximum dollar figure that an employer can garnish from an employee’s paycheck in a given pay period or workweek. This limitation is set no matter how many garnishment orders the employer has received.
The Wage and Hour Division of the DOL specifies that for ordinary garnishments — or “those not for support, bankruptcy, or any state or federal tax” — the weekly amount to be garnished from your paycheck can’t exceed the lesser of two figures:
— One-fourth of your disposable earnings, which is how much is left in your paycheck once legal deductions such as taxes and Social Security have been made.
— The amount by which your disposable earnings are greater than 30 times the federal minimum wage.
DOL offers the following example on its website:
Say you have a weekly pay period and your disposable earnings are $217.50 or less. If $7.25 is the federal minimum wage, the employer cannot legally garnish your wages in this case. But if your disposable earnings are greater than $217.50 but less than $290 (which is the minimum wage times 40, in this case), then your employer can garnish $72.50. And if your disposable earnings total $290 or more, then the maximum amount that the employer can garnish is 25% of that.
DOL also notes that if your pay periods cover more than a single week, your employer must use multiples of the weekly restrictions to determine the highest amount they can garnish. You can see a table that calculates sample amounts or use this free online wage garnishment calculator for reference.
How to Stop or Challenge Wage Garnishment
Title III, which provides protection for every individual who receives personal earnings, provides some legal protection to workers regarding wage garnishment. It will, in most cases, “give individuals the right to receive at least partial compensation for the personal services that they provide despite garnishment,” according to the DOL. Title III additionally prevents employers from firing staff members due to wage garnishment for any one debt, but it doesn’t protect employees once their earnings have been garnished for subsequent debts.
If you feel that your wages are being garnished illegally, you can submit a complaint to the Wage and Hour Division, which has final authority when questions arise over the amount of money garnished from an employee’s paycheck, as well as over termination. There are resources and additional information to help employees file a complaint related to wage garnishment.
You can also try to stop or challenge wage garnishment by speaking with a lawyer. “Usually, you have the right to written notice and a hearing before your employer starts holding back some of your wages to pay your judgment creditor,” according to Nolo, a site that provides answers to legal inquiries. However, time is limited — anywhere from five days to a month — to raise your objections before wage garnishments begin.
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