Garnishment: What It Means for Employers

What it means in practice

The federal rules are in Title III of the Consumer Credit Protection Act (CCPA), which defines garnishment as "any legal or equitable procedure through which the earnings of any individual are required to be withheld for payment of any debt" (15 U.S.C. 1672(c)). The Department of Labor's Wage and Hour Division enforces Title III (15 U.S.C. 1676). DOL Fact Sheet #30 says this covers most court-ordered garnishments, IRS and state tax levies, and federal agency administrative garnishments, but "wage garnishments do not include voluntary wage assignments" the employee agrees to. The employer is a third party: it withholds and remits through payroll, and DOL says questions other than the limits go to the court or agency that issued the order.

Earnings. The statute defines earnings as "compensation paid or payable for personal services, whether denominated as wages, salary, commission, bonus, or otherwise," including periodic pension or retirement payments (15 U.S.C. 1672(a)). Fact Sheet #30 adds that lump sums paid for services count, such as bonuses, commissions, sign-on awards, retroactive merit increases, holiday pay, and termination or severance pay, so supplemental wages are usually in scope. Lump sums unrelated to services and Section 127 educational assistance are not earnings, and for tipped employees only the cash wage plus any tip credit counts. See wages for the broader term.

Disposable earnings. Disposable earnings are "that part of the earnings of any individual remaining after the deduction from those earnings of any amounts required by law to be withheld" (15 U.S.C. 1672(b)). Fact Sheet #30 lists federal, state and local taxes, the employee share of Social Security and Medicare (FICA), state unemployment tax and mandatory retirement contributions. Deductions not required by law generally are not subtracted, including health and life insurance premiums, union dues, charitable gifts, voluntary retirement contributions and repayment of employer advances. Disposable earnings therefore start from gross pay and are usually higher than net pay.

The ordinary limit and pay periods. For a workweek, the most that may be garnished is the lesser of 25% of disposable earnings or the amount by which disposable earnings exceed 30 times the federal minimum wage "in effect at the time the earnings are payable" (15 U.S.C. 1673(a)). The cap covers all garnishments in the period combined. For longer pay periods, 29 CFR 870.10 multiplies the weekly protected amount by the number of workweeks, counting a calendar month as 4 1/3 workweeks. At $7.25, the protected amounts are $217.50 weekly, $435.00 biweekly, $471.25 semimonthly and $942.50 monthly, and the full 25% applies at $290.00, $580.00, $628.33 and $1,256.66 (Fact Sheet #30). The date pay is paid or payable controls, not the order date, so a minimum wage increase changes the protected amount for later paychecks (29 CFR 870.10(d)). The regulation's printed tables still show 1991 figures; use the current rate.

Support orders. For child support or alimony, the cap rises to 50% of disposable earnings if the employee supports another spouse or dependent child, or 60% if not, and to 55% or 65% to the extent the order covers support for a period before the 12-week period ending with the start of the workweek (15 U.S.C. 1673(b)(2)). Federal law requires states to provide that support withholding includes any employer fee the state sets, stays within those limits, is paid to the state disbursement unit within 7 business days of the payday, and has priority over other legal process under state law (42 U.S.C. 666(b)). The notice must be on the OMB-approved Income Withholding for Support form, and the employer must notify the state promptly when the employee leaves (45 CFR 303.100). For an order from another state, the employer applies the law of the state of the employee's principal place of employment for the fee, the maximum, the timing and priorities. Employers who fail to withhold are liable for the amount, and states must fine employers who discharge, refuse to employ or discipline a parent because of the withholding. We could not load the ACF Office of Child Support Services employer pages, so this section relies on the statute and eCFR.

IRS levies. If a taxpayer neglects or refuses to pay within 10 days after notice and demand, the IRS may levy on wages after written notice of intent (26 U.S.C. 6331(a) and (d)), and a wage levy is continuous until released (6331(e)). The employer receives Form 668-W(ACS) or 668-W(ICS) with Publication 1494 and gives the employee a Statement of Dependents and Filing Status, separate from the Form W-4, to return within three days. If it is not returned, the exempt amount is figured as married filing separately with no dependents, and the IRS says employers generally have at least one full pay period before sending funds. In the 2026 table, a single weekly-paid employee with no dependents has $309.62 exempt, or $615.38 with three dependents. An employer that fails to honor a levy is liable for the amount not surrendered plus interest, and a 50% penalty without reasonable cause (26 U.S.C. 6332(d)). Payoff figures are not released to the employer.

Federal agency debts and student loans. A federal agency may garnish up to 15% of disposable pay for a delinquent nontax debt after at least 30 days' written notice (31 U.S.C. 3720D), and the Higher Education Act gives the same 15% power for defaulted federal student loans (20 U.S.C. 1095a). These orders apply notwithstanding state law, and the definition differs: disposable pay is figured after health insurance premiums as well as amounts required by law (31 CFR 285.11(c); 34 CFR 34.3). The employer withholds the lesser of the order amount (up to 15%) or the excess over 30 times the minimum wage, returns the certification, and stops only when told. If another order was served first, or a family support order at any time, the agency order is limited to 25% of disposable pay minus the earlier amounts (31 CFR 285.11(i); 34 CFR 34.19 and 34.20). The agency may sue an employer for amounts not withheld (31 CFR 285.11(o)); under the HEA, that includes attorneys' fees and possible punitive damages.

Bankruptcy. A bankruptcy petition generally operates as an automatic stay of actions to collect pre-petition claims against the debtor, but the stay does not cover income withholding for a domestic support obligation (11 U.S.C. 362(a) and (b)(2)(C)). Chapter 13 court orders are outside the CCPA percentage limits (15 U.S.C. 1673(b)(1)(B)). If an employee says they filed, ask the court or the party that issued the order how to proceed.

Multiple orders. The CCPA does not set priorities among garnishments; state law or other federal law does, and the total still may not exceed the CCPA percentages (29 CFR 870.11). If 45% is withheld for taxes with priority, a support order may take only the difference up to 50% to 65%. If 25% is withheld for an ordinary garnishment that has priority under state law, support may take the difference up to its limit.

Discharge protection. No employer may discharge an employee because earnings were garnished "for any one indebtedness" (15 U.S.C. 1674), and Fact Sheet #30 says this holds regardless of the number of levies brought for that one debt. Federal law does not displace stricter state law on discharge for more than one debt (15 U.S.C. 1677). Agency and student loan orders go further and bar discharge, refusal to hire or discipline because of the order (31 CFR 285.11(m); 34 CFR 34.27).

Where states differ. The only state exemption listed in DOL's regulation is for Virginia garnishments, based on a finding that Virginia law is substantially similar (29 CFR 870.57). Two examples from official state sources: the California courts' guide for employers says an ordinary earnings withholding order is limited to the lesser of 20% of weekly disposable earnings or 40% of the amount above 48 times the state or higher local minimum wage, and that the Employer's Return is due within 15 days. New York CPLR 5231 uses 30 times the greater of the federal or state minimum wage as its weekly floor. Check your own state; DOL lists state labor offices.

Recordkeeping and minimum wage. FLSA records must show total deductions each pay period and, in individual records, the dates, amounts and nature of each deduction (29 CFR 516.2(a)(10)). A court-ordered deduction paid to a third party counts as wages paid to the employee, provided the employer gets no profit or benefit; withholding beyond the CCPA limits does not (29 CFR 531.39). Keep each order with the date received.

Questions employers ask. Does a bonus get garnished? Usually; Fact Sheet #30 treats bonuses and commissions as earnings and tests each payment. Can we take more if the employee agrees? Agency and student loan orders allow more with written consent (31 U.S.C. 3720D(b)(1)). Is an employee wage assignment a garnishment? No, under Fact Sheet #30. What if the employee leaves? For support orders, notify the state; for agency orders, follow the order's instructions. Confirm specifics with the issuing court or agency or a qualified professional.

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