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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.


Union Rights on Wage Assignment in California

The law requires an employer to withhold wages of a non-custodial parent and have them remitted to the custodial parent towards child support. This is aimed at making sure that the non-custodial parent does not fail to honor his or her obligations promptly. In other incidents, when a person has failed to honor their debt obligations, the lender may resort to using the court to have a debtor’s wages assigned in a manner that guarantees that all outstanding dues are paid. Someone may ask whether their labor union would have any say towards such remittances in California.

Under the Labor Code Private Attorneys Act, 2004 (Labor Code Sec 2699) and under the unfair competition Law (Business and professions code sec 17203), a union has limited capacity to sue on behalf of an aggrieved party on matters involving the person’s statutory right. The Union can thus not sue at a representative capacity to have a wage assignment fixed at a certain figure whether the union member is the custodial parent/lender seeking child support/ debt settlement or the non-custodial parent/ debtor who wants to have the figure set at a reasonable level.

Although a union member has a right to sue for issues related to wage assignment, the power to transfer that right to a third party is only given to a legislative body. This means a union member cannot transfer their right of cause of action to the union. A union should therefore obtain authorization from a legislative body to represent its employee(s) in any course of action. This allows the union to use its collective bargaining ability to influence the decision of the courts with respect to a wage assignment case. The union however cannot transfer its right to cause of action to a third party, who is an employee.