- 1 What Exactly is Wage Garnishment?
- 2 When Can a Creditor Garnish Wages?
- 3 Debts Exempt From Court Judgement Requirement:
- 4 Maximum Amount in California
- 5 Maximum Amount as Stated by Federal Law
- 6 Multiple Court Judgements
- 7 Conclusion
- 8 Talk to an Experienced California Bankruptcy Attorney at Lynx Legal Service
What Exactly is Wage Garnishment?
When an individual is in debt to a creditor, one way that the individual can be O2 – C11 -What Are the Laws for Wage Garnishment in Californiaforced to pay what they owe is through a wage garnishment order. Such an order allows the creditor to obtain payments on what is owed directly from the individual’s paycheck. If one of your employees was taken to court over a debt, you may receive a court judgment that orders you to withhold a part of their wages. You will then be legally obligated to withhold the amount specified in the court order from your employee’s paycheck, which you will then have to direct to the designated creditor or agency.
When Can a Creditor Garnish Wages?
Creditors must sue an individual who has not paid their debt. The court must be in favor of the creditor and make a court judgment that allows the creditor to claim the individual’s wages. This is often the only way that a creditor can legally oblige a debtor’s wages, although there are some exemptions.
Debts Exempt From Court Judgement Requirement:
While most debts require creditors to sue the debtor to get a court judgment for a pay cut, there are some types of debt that do not require a court judgment. If you receive a pay cut order from the IRS, the US Department of Education, or the state tax agency for the following types of debt, you will also be legally obligated to deduct wages from the employee’s paycheck.
CHILD SUPPORT AND ARREARAGES
Child support and arrears are taken very seriously in California. The majority of pay cut orders handled by employers are for child support and collection. Amounts that can be deducted from an employee’s income for child support and revenues vary from state to state, but in California it is as follows:
When Debtor Is Currently Supporting A Child Or Spouse
This means that if the debtor (your employee) owes money for child support but is currently supporting a spouse or another child, then the limit on how much of their disposable income (income remaining after taxes) can be garnished is 50 percent.
When Debtor Is Currently Not Supporting A Child Or Spouse
Debtors who are not supporting a spouse or any other children can have up to 60 percent of their disposable income garnished for what they owe in child support.
Arrears Exceeding 12 Weeks
Any debtor who has not paid what they owe in child support for more than 12 weeks could have an additional 5 percent of their disposable income above the original 50 or 60 percent (based on whether they are currently support for spouse and anyone other than the children).
When you receive a child support payment, the paperwork will specify exactly how much you should receive each pay period (it is broken down by different pay periods).
FEDERAL STUDENT LOANS
The US Department of Education reserves the right to recover debtor’s wages if they fail to repay their student loans. They will usually sign a contract with a collection agency to collect what’s owed through a collection order. However, California has very strict limits on how much debtor income can be charged in lieu of their federal student loan. A maximum of 15 percent of the debtor’s disposable income can be collected – and this amount cannot exceed 30 times the minimum wage.
UNPAID FEDERAL TAXES
The IRS can order wage garnishment on debtors who have failed to pay their federal income taxes. They can garnish up to 25 percent of the debtor’s disposable income, even though it depends on other factors, such as how many dependents the debtor has and the deductible rate. State and local governments can also claim the wages of a debtor owed taxes. Debtors who owe state taxes to California could also have a cut of up to 25 percent of their disposable income.
Maximum Amount in California
If a creditor has obtained a wage garnishment court order, then they can garnish the lesser of up to 25 percent of the debtor’s disposable income or the amount by which the debtor’s weekly disposable income exceeds 40 times California’s hourly minimum wage (which is currently $11/hour or $12/hour depending on how many employees you have and which will continue going up by $1 every year until it’s $15/hour).
This means that if you have less than 25 employees and the debtor makes $500 a week after taxes and deductions, the creditor can only take the lesser of $125 (25 percent of $500) or $60 ($500 – $440 ($11 x 40)). This means that they could only garnish $60 in wages.
Maximum Amount as Stated by Federal Law
California actually protects debtors from wage garnishment much more since federal laws allow creditors to either garnish 25 percent of a debtor’s disposable income or the amount by which the debtor’s weekly disposable income exceeds 30 times the federal hourly minimum wage (currently only $7.25).
Multiple Court Judgements
An employee can have more than one wage garnishment order levied against them for multiple debts. If this happens, the amount that can be garnished for all of their wage garnishment orders cannot exceed 25 percent of their disposable income in total, with the exception of child support. If they have more than one garnishment, any child support garnishments must be taken first. The remainder can only be taken if there is enough disposable income to do so.
Garnishing the wages of an employee and sending them to the proper creditor or agency can be time consuming and confusing. However, it’s a legal obligation. If you receive a wage garnishment order, make sure that you’re legally obligated to follow the order. Then notify the employee that you will be garnishing their wages. Garnishment orders will come with a copy for the employee that has to be given to them. If your employee contests the garnishment, they must do so with the entity that submitted it and you must continue taking the garnishment until you receive a notice to stop.
Talk to an Experienced California Bankruptcy Attorney at Lynx Legal Service
If you’re struggling with debt and considering bankruptcy, please contact Lynx Legal Service for a free, confidential consultation. With offices at 7960 Brentwood Blvd, Brentwood, CA, US 94513, we represent clients across California, providing intelligent, compassionate legal advice in the face of life challenges.