Louisiana Wage Garnishment Laws
Though Louisiana has the only legal system in America using the “Napoleonic Code,” based on the famous French emperor, as in every other state creditors in Louisiana can garnish an employee’s wages to satisfy their debts. For those who want to go to the source, the best place to start is the Louisiana Department of Labor’s Workforce Commission website, here: http://www.laworks.net/, though you might find the technicality and jargon hard to follow until first reading this article and understanding how the garnishment process generally works in this unique state.
Laws Governing Wage Garnishment in Louisiana
The U.S. legal system works as a form of “federalism.” This means that every kind of debt collection action – whether derived from an unpaid credit, medical bill, student loan, unpaid tax bill, child support arrearage, or otherwise – must comply with both federal law and state law. For a creditor seeking to garnish wages in Louisiana, this means creditor, debtor-employee and employer must all be familiar with applicable federal law and the unique Louisiana statutes. And because of “federalism,” if federal law wants to have the final word on the subject, it can do so (or it can allow the state to provide greater protections).
Wage Garnishments Only Apply to the Employment Relationship
Regardless of the state in which it takes place, Wage Garnishment at its essence, a legal tool used by creditors to collect unpaid debts. In most situations, the creditor must first file a lawsuit, overcome any defenses the debtor may assert (many debtors simply default), and then obtain a Monetary Judgment in the exact amount of the debt due plus interest (both past and ongoing). Once that Money Judgment is obtained, the creditor may then apply to the same court for a Wage Garnishment (or Attachment Order), to which the debtor may assert additional defenses. That Order is thus the debt collection tool, if you will, with which wages can be garnished.
What makes wage garnishment unique, as opposed to other forms of debt collection (levying on bank accounts, repossessing personal property, foreclosing on real property), is that Wage Garnishments to be of any value to the credit presuppose that the debtor is employed by an employer which can be ordered to garnish his wages. After all, many people are not employed. They own their own businesses, act as independent contractors, or work as freelancers. The Wage Garnishment process does not apply in any of those situations. It only applies to currently-employed individuals paid through W-2s with employers who can be ordered to withhold from their wages.
The Way the Wage Garnishment Process Works
Because it is so often used, the Wage Garnishment process is a simple one. Generally it commands the employer to withhold part of an employee’s regular wages and pay that part over to the creditor to satisfy the Money Judgment (and underlying debt) reflected in the Garnishment Order. The Order must be taken seriously by the employer, because failure to comply with its directive can subject the creditor to fines or worse. On the other hand, the creditor cannot over-attach wages, either. The creditor’s obligation is to garnish what the law and order allows, not a penny more and not a penny less.
Limitations on Wage Garnishment
In the absence of legally-mandated limitations, an aggressive creditor could garnish or attach 100% of a debtor’s wages, leaving him and his family with nothing to live on. In other words, in a society where we didn’t rein in and supervise the debt collection process, an overly-enthusiastic (or angry/greedy) creditor could render an employee penniless, unable to put a roof over his or his family’s head, or food on the table. As a result, public policy compassionately protects debtors by applying concepts of hardship and thus limits how money can be garnished from any one pay check.
In Louisiana, these protections come from federal law as Louisiana has not chosen to provide its residents with greater protections (as many other states do). Under federal law – specifically, the Consumer Credit Protection Act – the most that a typical creditor can garnish from an employee’s pay check is subject to what is called “the 25-30 Rule.”
Under the “25 Rule,” the most the creditor can take is 25% of the employee’s “Disposable Earnings.” “Disposable earnings” are wages remaining after legally-mandated deductions for such things as Social Security and taxes. Voluntary deductions for pension, medical insurance, and employee savings plans do not count. Private components like insurance premium deductions generally cannot be deducted to calculate “Disposable Earnings.”
Under the alternative “30 Rule,” the creditor can only take amounts above 30 times the federal minimum wage. Thus, amounts up to 30 times minimum wage are exempt. Ever since July 2009, the federal minimum wage has been $7.25 per hour for employees with medical insurance premiums being automatically taken out of their pay check, and $8.25 for employees without such premiums being automatically deducted. No matter which rule is applied, under the supreme mandate of federal law, the creditor is only entitled to garnish the lesser of the two of the two formulas.
Wage Garnishment Does Not Always Require a Money Judgment
Most creditors must first go through the process of filing a lawsuit, allowing the debtor to raise any defenses he or she may have, and go the whole mile to obtain a Money Judgment before it can garnish wages. The typical debts involved here include credit cards, medical bills, retail debt like mobile phone services, utilities, and the like. Certain debts, however, do not require the creditor to jump through hoops. To avoid the hassle, time, delay, and expense of filing a lawsuit and obtaining a Money Judgment, these creditors can proceed administratively. Here is a list of the more common administrative wage garnishments that may come knocking on the employer’s door:
- Court-ordered and past due child support,
- Alimony or spousal support that is past due,
- Federal, state and local fines,
- Income taxes arrearages at the federal or state level,
- State property taxes,
- Defaulted student loans.
Because there are others, be sure to do your research if faced with an administrative Wage Garnishment.
Special Wage Garnishment Treatment for Child Support and Alimony
For over three decades, all state-court orders for child support, spousal support, and alimony have automatically triggered wage garnishments for the paying spouse who holds a job. No separate lawsuit must be filed for child or spousal support to be taken from an employee’s pay check. For current support, as with consumer debts, federal law limits the amount garnished to the previously-discussed “25-30 Rule.” However, where support payments are past due – that is a different story. For past due support, up to 60% of wages can be garnished unless another dependent is being supported, in which case the maximum is 50%. And if the debtor is in arrears more than twelve (12) weeks, an additional five percent (5%) can be tacked on. This means that, in the more severe cases, as much as sixty-five percent (65%) of that employee’s “disposable earnings” can be garnished for support.
Special Treatment of Student Loans
The U.S. Department of Education (DoE) exercises jurisdiction over the collection of student loans. Should a student loan go into arrears and be declared in default, the DoE may issue an administrative wage garnishment to repay this loan. However, the most that the DoE can garnish is 15% of the student’s (or guarantor’s) “Disposable Earnings,” or only amounts more than 30 times the minimum wage, as previously delineated. You could look at this as a “15-30 Rule,” if you’re getting into the swing of it.
Other Debts Receiving Special Treatment
Many debts receive special treatment under federal law and are deemed exempt from any form of wage garnishment. These include:
- SSI Benefits
- Unemployment Insurance Benefits
- Veteran’s Benefits
- Certain Military Pensions
- Public Assistance Payments
- Disability Compensation
- Worker’s Comp
- Railroad and Black Lung benefits
Special Rules for Bankruptcy and Federal IRS Tax Debts
The Court in Chapter 7 bankruptcy proceedings, or the trustee in a Chapter 13 reorganization, can reach as much as ninety percent (90%) of an employee’s “disposable earnings,” though hardship is always considered. Likewise, the IRS can garnish as much as seventy percent (70%) of an employee’s wages, after applying a complicated formula that takes hardship into account.
Priority Between Multiple Garnishment Orders
When the debtor-employee faces multiple types of garnishment orders, the employer must first prioritize certain debts over others, subject collectively to the previously-discussed limitations. Generally, the order of priority runs as follows:
- past due child support always comes first,
- followed next by past due federal income taxes,
- then defaulted student loans,
- bankruptcy payments, and
- state and local levies.
All of these come before consumer debt, credit cards, pay day loans, even medical liens, and it is the character of the debt, not the timing or order of garnishment that is controlling.
Louisiana Job Protection for Wage Garnishment Process
Some employers, especially smaller ones, would rather fire the employee than shoulder the burden of garnishing wages. Under federal law, this is prohibited and can subject the employer to liability, fines, or worse.
Louisiana Wage Garnishment law can be simple in some situations and complicated in others, depending on the nature of the debt and the debtor-employee’s unique circumstances. If the debt is anything other than de minimus, in which case you should just pay it off, it is always best to give yourself the peace of mind acquired through consulting a qualified debtor-creditor, legal, or tax professional.
Chapter 4, Garnishment Under a Writ of Fieri Facias, Art. 2411. Garnishee; effect of service; financial institutions, https://legis.la.gov/legis/Law.aspx?d=111454.
Louisiana Department of Labor, Workforce Commission website: http://www.laworks.net/.
Title II of the Consumer Credit Protection Act, 15 U.S.C. Section 1671 to 1777 (garnishment orders).
The Federal Wage Garnishment Law, Title III of the Consumer Credit Protection Act, 15 USC 1671 et seq., https://www.dol.gov/whd/regs/statutes/garn01.pdf.
United States Department of Labor, Wage and Hour Division, Fact Sheet #30: https://www.dol.gov/whd/regs/compliance/whdfs30.htm.
United States Department of Labor, Wage and Hour Division, Federal Wage Garnishments, https://www.dol.gov/whd/garnishment/.
United States Department of Labor, Summary of Major Laws of the Department of Labor, https://www.dol.gov/general/aboutdol/majorlaws.
Fair Labor Standards Act, as amended, Public Law 99-150, enacted on November 13, 1985, amending the Fair Labor Standards Act, https://www.gpo.gov/fdsys/pkg/STATUTE-99/pdf/STATUTE-99-Pg787.pdf.