Like all states, Wyoming recognizes a process by which creditors can garnish the wages of employees in order to satisfy certain judgments and unpaid debts. Operating within a system of exemptions and limitations, and depending on the debt involved, the creditor must first obtain a money judgement and/or a wage garnishment order. Some debts like federal income taxes and child support do not require a money judgement and instead are permitted to breeze through much simpler administrative hoops. Since creditors, employers and employees all have certain rights and obligations in the wage garnishment process, let’s look to the particulars of federal and state law as they apply to wage garnishments in the state of Wyoming.
How the Wage Garnishment Process Usually Begins
When a monetary debt goes delinquent and unpaid, the collection process begins. For a while the creditor sends late notices; then the debt gets assigned to a collection agency and the debtor runs the gamut of the dunning process; and finally, patience worn thin or facing a statute of limitations, the creditor turns the debt over to its attorney and a civil collection is filed. Like any other lawsuit, the debtor is wise to contact the complaining creditor and try to work something out.
Failing that, the debtor should answer the complaint and raise any defenses that might apply. In the arena of unpaid debts, these defenses fall into three groups:
- The debt has been wholly or partially paid;
- The debt is exempt from collection; or
- Any lawsuit seeking to enforce the debt is barred by the lapse of time, i.e., the statute of limitations.
In Wyoming, despite being otherwise friendly to debtors, the statute of limitations is not. Whereas in a state like Delaware the creditor must bring suit within four years on unpaid credit cards, in Wyoming the statute of limitations for all open accounts (such as credit cards), is a lengthy eight years. Written contracts and promissory notes have ten years. However, if the debt is that old, it can no longer be collected, even if the debt is still owed and unpaid.
Wyoming Wage Garnishment Orders
When none of the affirmative defenses have merit, or if the debtor fails to answer the complaint and a default judgment is entered, the creditor may swiftly apply to the court for a wage garnishment order. Once issued by the Judge, the Court will serve the garnishment order on the debtor’s employer. The employer then wears the hat of the garnishee who must comply with the order without violating the rights of its employee. Certain delinquent debts, such as unpaid federal income taxes and child support, can proceed straight to a garnishment order without the need of a collection lawsuit or court judgment. In either situation, the employer-garnishee now has certain obligations that must be discharged promptly.
Employer Obligations as Garnishee of a Wage Garnishment Order
The legal document the employer receives is called a “Writ of Garnishment." In Wyoming, the Writ typically directs the employer to supply certain information to the court within ten days. The information required is as follows;
- the total amount of the employee’s next paycheck before deductions of any kind, i.e., the amount of the gross wages,
- the date or dates that paychecks are issued each week, bi-weekly, or month;
- a general description of the employee’s job and title; and
- the existence of any other wage garnishments currently pending.
Important Distinction Between Employees and Independent Contractors
More than ever before, the American workforce has transformed into an economy replete with freelancers who work from home and independent contractors who work on a project-by-project basis. Technically speaking, these individuals are not employees and the income they bring home is not wages under federal and Wyoming wage and hour law. There is no overtime pay, they decide when and where they will work, and they pay their own withholding taxes. The income of these hearty individuals cannot be reached with a traditional wage garnishment order. If a company receives a wage garnishment order for a freelancer or independent contract, it must be returned unpaid with the information noted that the debtor is not an employee.
A World of Wage Garnishments without Exemptions and Protections
In a world without exemptions and protections for collection of debts, the first creditor to obtain a judgement against a debtor for an unpaid debt of anything, such as a credit card or payday loan, could garnish the debtor’s entire paycheck, leaving him nothing. Such economic and social chaos would then burden the government with providing emergency welfare benefits with all the hardship, cost, and red tape that that would entail. For these reasons, Congress has enacted legislation at the federal level to provide all Americans certain minimal rights and protections against wage garnishment.
Debts Exempt from Wage Garnishment
Federal law generally provides that social security payments cannot be garnished, so as to protect the security of retirees. However, there are exclusions to this broad exemption for delinquent federal income taxes, child support, and alimony or spousal support, which are considered to be of greater public interest. In addition to that, Wyoming has enacted very broad exemptions for a host of private and public pensions, insurance and other benefits that far exceed those of other states. Look into the particulars depending on this unique Wyoming law as to the exact benefits you receive.
The Protections of Federal Law
The federal Consumer Credit Protection Act places a limit on what percentage of a debtor-employees’ wages can be garnished by the creditor. Sometimes called “the 25-30 rule," the limitations are computed as follows:
- Under the 25% rule, no more than twenty-five percent of the employee’s “disposable wages" can be garnished, ensuring that seventy-five percent of the paycheck makes it home to pay for living expenses.
- Under the 30% rule, a creditor cannot garnish any wages until they exceed thirty times federal minimum wage. If anything is left after that, all of that amount can be garnished.
In the event that one rule protects more wages than the other, the greatest protection possible is afforded the debtor-employee. “Disposable wages" are generally those remaining after deduction for FICA, which leaves about 90% of the gross paycheck. So the 25% and 30% rules are being applied, typically, to only 90% of the employee’s paycheck, leaving the rest to the debtor-employee to take home.
IRS Tax Debts and Bankruptcies
The “25-30 rule" does not apply in the case of bankruptcies and unpaid federal income taxes. In both cases, there is a general 50% rule, meaning as much as 50% of the debtor’s disposable wages may be garnished. However, in both situations, the hardship to the debtor-employee is a major factor that must be taken into account and usually is, except in special situations.
Child Support Orders in Wyoming
Like most states, Wyoming is tough when it comes to unpaid child support. The Wyoming Income Withholding Act makes sure that child support is paid on time and as ordered by the court or an administrative division. This is done by the Court or disbursement unit serving the employer with an income withholding order. No later than the first pay period following receipt, the employer must deduct the amount and send check to the court clerk for disbursement. For its troubles, the employer may charge a $5 fee and deduct the miniscule amount from the employee’s wages as well.
Handling Multiple Garnishment Orders
It is not uncommon for a debtor to suffer more than one wage garnishment at the same time. In hard times, the debts pile up and go unpaid. However, regardless of the number of garnishments, “the 25-30 rule" reaches across the board to all debts and garnishments. No matter how many garnishments there are, only 25% of wages can be attached, never to encroach upon any amount within the ambit of 30 times federal minimum wage. But for whom does the employer garnish the wages, is the question, as it’s not “first in time, first in right" for many debts.
Subject as always to federal and Constitutional limits, employers must recognize the follow priority in satisfying the multiple garnishment orders, regardless of which order arrived first:
- Delinquent child support and alimony,
- Arrearages in federal, state, and local taxes,
- Defaulted student loans, and
- Private consumer debts which are paid on a first-come, first-serve basis.
Due to the special protections for retirees in Wyoming, the nuances of federal and state laws governing wage garnishment can be both tricky and technical. Unless the debtor has a small, simple debt to address, one which might be paid at once or in a few payments, it is always wise to consult professionals familiar with debtor-creditor, bankruptcy, and wage garnishment laws. It’s better to have a little peace of mind as to what’s in store and what, if anything, you can do about it, than to sit back not knowing what will happen next.
Wyoming Statutes, Garnishment, WYO. Stat. Ann., Sec. 1-15-401, et seq.
Wyoming Income Withholding Act, WYO. Stat. Ann., Sec. 20-6-201 et seq.
Exemptions, WYO. Stat. Ann., Sec. 1-20-101, et seq.
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
Wyoming Debt Collection Laws, https://www.fair-debt-collection.com/state-laws/wyoming-fair-debt-collection-practices-act.html
Wyoming Statutory Exemption on Wage Garnishment, https://repository.uwyo.edu/cgi/viewcontent.cgi?referer=&httpsredir=1&article=1338&context=wlr