Washington creditors can attach debtors’ wages in a process known as wage garnishment. The type of debt involved will determine if and how the wages can be garnished, and in what amount. Certain wages are entirely exempt from wage garnishment, and certain debts support only limited garnishment. Navigating a system of exemptions and limitations, and depending on the debt involved, the creditor must first obtain a money judgement and/or an administrative wage garnishment order. Since the devil is in the details, let’s look to the particulars of federal and state law as they apply to wage garnishments in the state of Washington.
Beginning the Wage Garnishment Process
All garnishments start, in a way of speaking, with the debt itself. People become indebted for everything from consumer loans like credit cards to federal income taxes, child and spousal support, and student-educational loans. Working within the vicissitudes of the modern-day technological economy, with industrial processes overtaken by machines, software, and the Internet of Things, it is not surprising that seven percent of Americans at any one time are struggling financially and having their wages garnished for unpaid debts they’ve incurred along the way.
It always starts with debt collection notices, but eventually the debt collection lawsuit if filed and the debtor must address the problem by examining the complaint for calculation errors and legal defenses. Generally speaking, the debtor’s likely defenses (if indeed he has any) will fall into one of three categories:
- The bills have been wholly or partially paid and the debtor has the paperwork to prove it
- The debt is exempt from collection based on an applicable federal or state law
- So much time has passed that the claim has grown stale and is barred by the statute of limitations, which says that late claims are barred from collection even if owed.
Washington Statute of Limitations for Consumer Debt
Many states have a long statute of limitations for consumer debts, allowing creditors substantial leeway in bringing a debt collection lawsuit. Not so in Washington. In Washington, there is a six-year statute of limitations for most consumer debt. If the creditor waits any longer than that to sue, the complaint will be subject to dismissal as untimely regardless of the underlying merits.
Wage Garnishment Orders in Washington
Most collection cases are filed within the statute of limitations and proceed to judgement, even if contested. The result is a monetary award in the amount of the unpaid debt, plus interest and penalties. As soon as the judgement is entered, the creditor is free to ask the judge to issue a wage garnishment order so that the judgement can be satisfied. That order is served on the debtor’s employer with directions to withhold the employee’s wages and turn them over to the court or the creditor. The employer must be careful, however, as it cannot garnish contrary to the order of the court or contrary to federal and state law.
The Critical Difference Between Employees and Independent Contractors
In the state of Washington as much as anywhere else in modern America, more and more individuals are eschewing the traditional pursuit of employment in favor of being a work-at-home freelancer or independent contractor. Technically, people who make a living in this fashion are in business for themselves. They are not employees and do not earn wages under federal or Washington wage and hour law. They cannot claim overtime, worker’s compensation benefits, or unemployed insurance benefits. No FICA is taken out of their payments. As such, any wage garnishment order served on their “employer" is misplaced. The earnings of a freelancer or independent contract cannot be garnished as wages, because they are not considered wages in the world of wage and hour law.
Imagine a World of Wage Garnishments without Exemptions and Protections
It would be a stampede through the doors of companies employing the seven percent of Americans who, at any given time, are having their wages garnished. With no exemptions and protections in place, the creditor would be able to garnish the employee’s entire paycheck, leaving him nothing for living expense. The resulting social chaos would burden the state and federal government with a stampede of people falling onto the public dole. Realizing this, Congress long-ago enacted legislation that provides all Americans certain minimal rights and protections against wage garnishment.
Wage Garnishment Exemptions
Federal law provides one primary exemption from wage garnishment. So as to protect our retirees, social security payments cannot normally be garnished. However, certain debts are not subject to this exemption. These are debts imbued with a higher public policy calling, including unpaid federal income taxes, child support orders and arrearages, and spousal support. Separate and apart from the exemption, federal law also places limits on how much can garnished.
The Protections of Federal Law
The law that provides protections against garnishment in Washington is the federal Consumer Credit Protection Act. It limits the amount of wages that can be garnished to the lesser of twenty-five percent of the employee’s “disposable wages" (“the 25% rule") or to amounts in excess of thirty times federal minimum wage (“the 30% rule"). Federal minimum wage is $7.25 per hour, times thirty = $282.50. So the garnishment order can never encroach on that. “Disposable wages" are generally those remaining after deduction for FICA. This leaves approximately 90% of the gross paycheck, depending on dependents. Consequently, “the 25-30 rule" applies to 90% of the employee’s gross paycheck, leaving the remainder to him and his family.
Special Rules for IRS Tax Debts, Bankruptcies, Child Support, and Student Loans
As for all of these special categories of debts, the “25-30 rule" does not apply. The IRS can take more than 25% of an employee’s wages up to the point that it is hardship. In bankruptcies, the same is true, except the judge or trustee can even go higher, depending on the debts in place and income being earned. For child support, up to 65% of wages can be garnished, depending on the situation of the non-custodial spouse. The government can garnish wages up to 15% for defaulted student loans.
Sorting Multiple Garnishment Orders
Many debtors are facing more than one wage garnishment at the same time. The hard times seem to create a domino effect, with debts piling up and going unpaid. However, no matter how many wage garnishments are in place, “the 25-30 rule" comes to the rescue as it applies across the board. No matter how many debts and garnishments there are, no more than 25% of the employee’s wages can be garnished. But for whom does the employer garnish the wages, is the question, as it’s not “first in time, first in right" for certain superior debts.
Subject as always to other federal and Constitutional limits, multiple garnishment orders must be prioritized in the follow manner:
- First, child support and alimony payments, both current and in arrears,
- Second, delinquent federal, state, and local taxes,
- Third, government-guaranteed student loans that are in default, and
- Lastly, private consumer debts which are the only category paid on a first-come, first-serve basis.
Like all other states, Washington recognizes a host of federal and state laws that guide the wage garnishment process. Many of these laws are hyper-technical and nuanced, depending on the kind of debt, the age and amount of the debt, the number of creditors, and a host of other particulars. In situations like this, with so much on the line, it is always wise to consult with a professional about your rights and remedies in your unique circumstance. Qualified attorneys and CPAs may well know something that you do not, and it will certainly provide greater peace of mind than going it alone.
Washington Garnishment Law Generally, WA Rev. Code Sec. 6.27 et seq.
Washington Garnishment for Family Support, WA Rev. Code Sec. 26.23.060 et seq.
Washington Statute of Limitations for Written Contracts and Accounts, RCW 4.16.040.
Public Law 99-150, enacted on November 13, 1985, amending the Fair Labor Standards Act
Title II of the Consumer Credit Protection Act, 15 U.S.C. Section 1671 to 1777 – applies to all garnishment orders
Secondary Online Resources
Washington State Legislature online, http://leg.wa.gov/
Washington Office of Financial Management, Webpage for Garnishments and Assignments, https://www.ofm.wa.gov/sites/default/files/public/legacy/policy/25.60.htm
Washington Courts online, https://www.courts.wa.gov/