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Wage Assignment in the US: What You Need to Know

When employed and in debt, Title III of the Consumer Credit Protection Act (CCPA)provides for wage garnishment following a court order or any other equitable legal procedure such as state tax collection. The law determines the proportion of your earnings that may be withheld by an employer to pay your debt. However, the law does not apply where you voluntarily instruct your employer to deduct a specified amount from your earnings for debt payment.

The CCPA protects an employee from dismissal by an employer because of a single garnishment. Although a single garnishment may instruct a number of deductions from your earnings or involve several procedures in attempt to collect debt, it can’t get you fired. However, an employer may fire you for multiple garnishments in payment of two or more debts.

Additionally, garnishment law limits the total amount of earnings your employer can withhold for debt payment, depending on which of the calculations below results in the lesser deductions:

  •     25% of your disposable earnings
  •     The amount by which your disposable earnings exceed the current Federal minimum wage multiplied by 30

Under the proposed Fair Minimum Wage Act of 2013, the Federal minimum wage rises from $7.25 per hour to $10.10 per hour. Thus, if your weekly disposable income is $303 ($10.10 X 30) or less, it would not be subject to wage garnishment. On the other hand, if your disposable income is above $303, say $350, but below $404 ($10.10 x 40), you’d be paid $303 and the amount above it ($47) would be garnished.

If your disposable weekly earnings exceed $404, 25% of this amount would be subjected to garnishment. For instance, if your disposable weekly income is $455, 25% of this amount is $113.75 and would be garnished, leaving you with $341.25 as weekly payment.