In the State of Maryland (as with all other states), wage garnishment is a fully lawful and common form of debt collection practice. However, like any debt collection process in America, certain procedures, exemptions, exceptions, and defenses exist to the wage garnishment process. These vary from state to state and, in the case of Maryland, from county to county as well.
Laws Governing Wage Garnishment in Maryland
The U.S. legal system works as a form of “federalism." That means every kind of debt collection process there is – whether arising from credit cards, income taxes, child support arrearages, or otherwise – is proscribed and limited by some combination of federal law, state law, or both. In the case of Maryland creditors, debtors and employees, it is also essential to know the county in which the wage garnishment will be sought, as this will determine how much or how little of a debtor’s wages can be garnished.
The Wage Garnishment Process in the State of Maryland
In Maryland, Wage Garnishment follows the same general process as is followed in every other state for wage garnishment. Though there are exceptions, usually the creditor must begin by filing a lawsuit and obtaining a Money Judgment, which makes the successful creditor a Judgement Creditor. Any Judgement Creditor can then turn its Money Judgment turned into a “Writ of Garnishment," which is the precise phrase used in the Maryland Garnishment Rule.
The Writ of Garnishment is merely an order commanding the employer to take part of an employee’s wages and pay it to the creditor, to satisfy the Money Judgment (and underlying debt). Because they can only be applied to employee wages, Writs of Garnishment cannot be used to attach earnings of independent contractors, freelancers, or self-owned businesses. And once a Writ of Garnishment has been served, both employer and the employee can assert any applicable defenses (usually as to the amount sought to be garnished).
Limits on How Much Can be Garnished
In Maryland, the threshold determination is where the Wage Garnishment is taking place. If it’s taking place in Queen Anne’s County, Kent County, Worcester County or Caroline County, then the protections of federal law apply. Under federal law – specifically, the Consumer Credit Protection Act – the most that a normal 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 gross wages less deductions allowed for things like withholding, SSI, and union dues. 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. Amounts up to 30 times minimum wage, are thus 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.
If the garnishment is taking place in any other county, the process must conform to Maryland Code Annotated [Com. Law} section 15-601.1. Under this unique law, the creditor can only garnish the lesser of: a/ 25% of the employee’s “Disposable Earnings" for any particular week, or b/ the amount by which an employee’s “Disposable Earnings" exceed $145 for the week (the first $145 being exempt from garnishment).
What happens if the federal law would protect more wages from garnishment than the unique Maryland law? That question was answered in the 2014 appellate case of Marshall v. Safeway, 437 Md. 532. Because everything is viewed under the lens of “federalism," the Marshall court ruled the Judgement Creditor can only take the lesser amount, even if the state law would allow the creditor to take more in the unique circumstances involved. In other words, the minimum protections of federal law are supreme. And because of this case, in Maryland, be sure to look carefully at your Garnishment Form to make sure it complies with this ruling.
Here’s an illustration of how the Marshall decision works: Suppose an employee lives in Queen Anne’s County and earns $500 a week. $125 is equal to 25% of that employee’s “Disposable Earnings," and the employee’s “Disposable Earnings" minus 30 times the federal minimum wage is $282.50. In this case, the Judgment Creditor can only take the lesser of the two, i.e., $125 per week.
Situations Where a Money Judgment is Not Required to Carry Out a Wage Garnishment in Maryland
Not all debts require a Money Judgment, i.e., the filing of a lawsuit which goes to Judgement, thereby making the Creditor a Judgment Creditor, to accomplish a wage execution. Certain debts operate administratively to achieve the same thing, without the necessity, time, delay and expense of a Money Judgment.
For public policy reasons, i.e., ease and efficiency primarily, there are a host of situations where an employee’s wages can be garnished without the cumbersome process of first filing a lawsuit and obtaining a Money Judgment. The following are a non-exclusive list of the more common ones:
- Court-ordered child support and child support arrearages,
- Alimony or spousal support that is past due,
- Federal, state and local fines,
- Income taxes arrearages at the federal or state level,
- Property taxes due at the state level,
- Defaulted student loans.
There are others, of course, which means you always need to do your homework, especially where the debt does not fit in the more common categories that we have been discussing.
Special Treatment of Child Support and Alimony
For over 30 years, all court orders for child support and alimony (or spousal support) have included a self-executing provision for wage garnishment. 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 and State Taxes
The U.S. Department of Education is empowered to collect student loans. If a student loan falls into default, the DoE may issue an administrative wage garnishment (remember, no Money Judgement is required). However, the most that the DoE can garnish is 15% of your “Disposable Earnings," or more than 30 times the minimum wage. You could look at this as a “15-30 Rule."
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 Compensation
- 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 reorganizations, as a theoretical matter can reach as much as ninety percent (90%) of an employee’s “disposable earnings"…though hardship is always taken into account. Similarly, the IRS can garnish as much as seventy percent (70%) of an employee’s wages after applying a complicated formula where hardship is also taken into account.
Priority as Between Multiple Income Garnishments
When the debtor-employee faces multiple types of garnishment orders, the employer must first prioritize certain debts over others. 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 levies. All of these come before consumer debt, credit cards, pay day loans, even medical liens, and it is the type of debt, not the timing or order of garnishment, which controls.
Maryland Job Protection for Wage Garnishment Process
Some employers would rather fire the employee than shoulder the burden of garnishing wages, especially smaller one. Under federal and Maryland law, this is prohibited.
Maryland wage execution law can be simple in some situations and complicated in others, depending on a host of factors: type of debt, amount of debt, multiple garnishments, and the like. In more cases than not, a responsible debtor is advised to seek out a qualified debtor-creditor, legal, or tax professional for assistance and advice.
Maryland Code Annotated [Com. Law} section 15-601.1.
Maryland Rules on Garnishment of Wages: Rule 3-646. Garnishment of Wages.
Marshall v. Safeway, 437 Md. 542 (2014)
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, Federal Wage Garnishments, https://www.dol.gov/whd/garnishment/.
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.