Wage Garnishment

Wage garnishment occurs when a court order directs an employer to withhold earnings of an individual for payment of a debt.  Wage garnishments are commonly used for the collection of past due debts, including:

  • Credit and Installment
  • Federal and State Taxes
  • Student Loans
  • Child Support and Alimony

Background - If a debt goes unpaid and ignored, the courts may intervene by issuing a judgment requiring your employer to "garnish" or withhold a portion of your wages to pay back the debt.  When wages are garnished, money is deducted from the debtor's paycheck and sent to the creditor.  Garnishment is a legal remedy generally considered a collection tool of last resort.  In most states, the garnishment process can only be initiated by a court order.

Garnishment Amount - Only a certain percentage of wages can be withheld.  Employers first apply deductions that are legally required to be paid by the employee, such as federal, state and local taxes, unemployment insurance, and Social Security payments. The remaining amount is called “disposable income.”  The law protects employees by limiting the amount that may be garnished to 25 percent of disposable earnings in any pay period.  This limit applies regardless of how many garnishment orders an employer receives.  There are some exceptions depending on the type of debt.  For example, the law permits a greater percentage of an employee’s wages to be garnished for child support, bankruptcy or federal or state tax payments. 

Wage Garnishment and Job Security - Under the Consumer Credit Protection Act, your employer cannot fire you for having a single debt garnished from your wages.  However, the Act does not prevent the employer from firing you after two or more debts are garnished separately.  If you believe you have been improperly discharged because of wage garnishments, contact the Department of Labor. You may be able to have your job reinstated. If the Department determines that your employer knowingly violated the law, civil and criminal charges may be pursued.