If your earnings are subject to wage garnishment, federal and state laws set forth specific limits as to the total amount that can be withheld for garnishment purposes. While there may be various wage garnishment calculators available online, the process of determining the maximum amount that can be legally garnished is fairly straightforward.
Regardless of how many garnishment orders are received, Title III of the Consumer Credit Protection Act (which establishes federal garnishment law) limits the total amount of earnings that can be garnished to which of the following two calculations results in the lesser garnishment.
- 25% of the employee’s disposable earnings
- The amount by which the disposable earnings are greater than the current Federal minimum wage multiplied by 30
Disposable earnings are defined as the amount that remains after all deductions that are required by law (such as taxes) have been taken from your paycheck. Other withholdings, such as those for health insurance or union dues, aren’t included when calculating disposable earnings.
Note that if the amount of disposable earnings is more than $217.50 (30 times the 2011 federal minimum hourly wage of $7.25,) but less than $290, only the amount over $217.50 can be garnished (and not the full 25%.)
This means that:
- If your disposable income is $217.50 or less, no garnishment can take place.
- When your disposable earnings are more than $217.50, but less than $290, only the amount over $217.50 can be garnished.
- If your disposable earnings are more than $290, 25% of this amount can be garnished. For example, if an employee has a disposable income of $368, 25% of this amount, or $92, can be garnished, and the employee would be paid $276.
There are exceptions to this rule, however. Title III permits a larger amount of your wages to be subject to garnishment for bankruptcy, child support, or state or federal tax payments. Up to 50% of your disposable earnings can be garnished for child support or alimony if you’re supporting a new spouse or child (other than the one which is the subject of the order,) and 60% if you aren’t doing so. A further 5% may be garnished for support payments that are more than 12 weeks overdue.
When pay periods cover more than one week, multiples of weekly restrictions must be used to calculate the maximum amounts that may be garnished. So if you’re paid on a bi-weekly basis, when disposable earnings are at or above $580 ($290 x 2) for the pay period, 25% may be garnished – even if your disposable income for one of the two weeks was less than $217.50.
If more than one party is attempting to garnish a worker’s wages, there may not be enough money available to satisfy all of the garnishees. Still, the total amount being garnished for all parties can’t exceed the legal maximum. In these cases, any federal tax garnishments would have first priority, followed by local tax garnishments, and then other commercial garnishments.
Any disputes over the priority of garnishments would be handled by the court that issued the garnishment order. This court is also the means by an employee could attempt to get a garnishment dismissed or modified.
These garnishment restrictions don’t apply to some bankruptcy court orders or to debts related to overdue federal or state taxes, and if a state garnishment laws differ from the Consumer Credit Protection Act, the law resulting in the lesser garnishment amount must be observed.
If you have a question about your legal rights in relation to wage garnishment, it’s advisable to contact an attorney who has experience handling wage garnishment issues.
- U.S. Dept. of Labor, Wage Garnishment; http://www.dol.gov/compliance/guide/garnish.htm
- Money-Zine.com, Wage Garnishment Calculator: http://www.money-zine.com/Calculators/Loan-Calculators/Wage-Garnishment-Calculator/
- The Federal Wage Garnishment Law – Title III of the Consumer Credit Protection Act: http://www.money-zine.com/Calculators/Loan-Calculators/Wage-Garnishment-Calculator/