Job Security and Wage Garnishment

An employee cannot automatically be fired just because his employer receives an order from the court – or other debt collection process – to garnish his wages based on a single debt. The federal Consumer Credit Protection Act (“CCPA”) provides all employees of all states and the District of Columbia with certain minimum protections. Whether an employer can fire an employee for having to handle a wage garnishment order based on a second or subsequent debt, is another matter entirely. Some states provide further protections to employees, and some do not.

Protections of Federal Law

The protections provided by the CCPA are very specific. No matter how many levies or processes are served on the employer, it cannot terminate an employee for wage garnishments based on “any one debt.” After that, federal law does not afford an employee any further protection from termination for garnishment orders. Put another way, while the employer can complain about the hassle, administrative burden and general imposition of garnishments for a single debt, it does not have to shoulder the burden for garnishments based on second or subsequent debts.

Several examples illustrate the scope and limits of federal law. Assume that an employer is served with a garnishment order based on single judgment for $5,000 of past due credit card debt. This order is ongoing, week in and week out, until the $5,000 is paid in full. That’s a lot of administrative work, and especially smaller employers might feel the burden. And though they can manage it easier, larger employers might have hundreds of employees nationwide with wages being garnished for unpaid credit cards at any given time. In either case, it would be unlawful – in clear violation of federal law – for the employer to get fed up and terminate the employee.

Assume, by contrast, that same employer for the same employee is served with 2nd wage order based on an unpaid medical bill for $5,000. After several pay periods, the debt is paid off and the garnishment is lifted. Fearful that another garnishment order may soon arrive, the employer terminates the employee for excessive garnishments. In this situation, federal law provides no protection to the employee. Second and subsequent debts do not invoke the protections of federal law.

Protections Provided by State Law

Every state provides the employee some form of addition protection from being terminated for wage garnishment based on two or more debts. In all cases, the additional protection depends on the nature of the underlying debt.

Child support orders are far and away the most common form of protected wage garnishment. In most states, it does not matter how many debts are involved, and how many wage garnishments flow from there. An employee cannot be terminated because his wages have been garnished to pay child support.

Here is a list of the kinds of debts for which states may provide protection against termination beyond the reach of federal law for multiple garnishment debts/orders:

  • Spousal support
  • Children’s health care
  • Consumer creditors

In many states such as Indiana and Kansas, the number of debts and garnishment orders does not matter. Under no circumstances can an employer terminate an employee based on a wage garnishment order, what it says about the employee’s character or lack thereof, or how many underlying debts are involved.

And some states go further still, making it illegal for an employer to terminate, threaten to terminate, or harass an employee simply because it received multiple wage garnishment orders regardless of the number of underlying debts involved.

For a comprehensive list of employee wage garnishment protections by state, go to http://www.nolo.com/legal-encyclopedia/free-books/employee-rights-book/chapter2-9.html.

Practical Considerations

Just because federal and state laws allow employees to be terminated for excessive wage garnishments in certain cases, does not mean the employer must do so or will do so. Employers invest heavily in training and acclimating employees. Most of the time they have no desire to terminate good employees despite suffering the burden which multiple wage garnishments might impose. From the employees’ perspective, it is always a good idea to approach the Human Resources Department and advise it of the anticipated garnishment efforts. Doing everything possible to provide advance notice of the garnishment and limit the burden it imposes will go a long way.

Legal Claims for Wrongful Termination Based on Garnishment Orders

A terminated employee may sue an employer for violating any of the foregoing federal or state laws. At the federal level, the employee may obtain reinstatement of employment and back wages. The federal Department of Labor may file its own action, seeking to restrain and remedy violations. Employers who willfully terminate employees in violation of their wage garnishment rights may even face criminal prosecution and fines. State laws often provide similar remedies, varying from state to state.

References & Citations:
Federal Statute: Title III, Consumer Credit Protection Act (CCPA), 15 USC, §§1671 et seq.
Code of Federal Regulations: 29 CFR Part 870
Explanatory Brochures and Regulatory Materials Online: www.dol.gov/whd
U.S. Wage and Hour Division: Fact Sheet #30 – The Federal Wage Garnishment Law, Consumer Credit Protection Act’s Title III (CCPA)
Field Operations Handbook – 02/09/2001, Rev. 644, Chapter 16, Title III – Consumer Credit Protection Act (Wage Garnishment)
General Consumer Information: http://www.debt.org/garnishment-process/
Listing of Garnishment by state:
–           http://www.small-claims-courts.com/Wage-Garnishment-Laws.html
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