Employer Information Regarding Employee Garnishments

by Joseph C. Maya on Jun. 21, 2017

Employment Employment  Employment Contracts 

Summary: A blog post about garnishment compliance with the Consumer Credit Protection Act.

Contact the experienced employment law attorneys at Maya Murphy, P.C. today at (203) 221-3100 or JMaya@Mayalaw.com

Title III of the Consumer Credit Protection Act (CCPA), is administered by the Wage and Hour Division of the Department of Labor. The CCPA protects employees from discharge by their employers because their wages have been garnished for any one debt, and limits the amount of an employee’s earnings that may be garnished in any one week.  Title III applies to all employers and individuals who receive earnings for personal services (including wages, salaries, commissions, bonuses, and periodic payments from a pension or retirement program, but ordinarily does not include tips).

Employee wage garnishment typically occurs when an employer is required to withhold the earnings of an individual for the payment of a debt in accordance with a Court Order or other legal or equitable procedure.  The CPA seeks to prohibit an employer from discharging an employee because his or her earnings have been subject to garnishment for any one debt, regardless of the number of levies made, or proceedings brought to collect it.  However, if the employee’s wages are subject to a garnishment for a second or subsequent debt, the CPA does not apply and no protection is provided to the employee.

The CPA further limits the amount of earnings that may be garnished in any workweek or pay period to the lesser of 25 percent of disposable earnings, or the amount by which disposable earnings are greater than 30 times the Federal minimum hourly wage prescribed by Section 6(a) (1) of the Fair Labor Standards Act of 1938.  This limit applies regardless of how many garnishment orders an employer receives.  The CPA also permits a greater amount of an employee’s wages to be garnished for child support, bankruptcy, or Federal or State tax payments.

Under the CPA, for garnishment purposes, an employee’s “disposable earnings,” is defined as the amount of earnings left after legally required deductions (e.g., Federal, State and local taxes; Social Security; unemployment insurance; and state employee retirement systems), have been made.  Deductions not required by law (e.g., union dues, health and life insurance, and charitable contributions), are not subtracted from gross earnings when the amount of disposable earnings for garnishment purposes is calculated.

If an employer were to violate the CCPA, such violations could result in the reinstatement of a discharged employee, payment of back wages, and restoration of improperly garnished amounts.  Where violations cannot be resolved through informal means, the Department of Labor may initiate a court action seeking restraints of the policies of the violating employer.  Employers who willfully violate the discharge provisions of the law may be prosecuted criminally and fined up to $1,000, or imprisoned for not more than one year, or both.

If you are an employer and are seeking compliance with the CCPA, contact the experienced employment law attorneys today at 203-221-3100, or by email at JMaya@mayalaw.com. We have the experience and knowledge you need at this critical juncture. We serve clients in both New York and Connecticut including New Canaan, Bridgeport, White Plains, and Darien.


Source: www.dol.gov

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