Garnishments & Wage Deductions Flashcards
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Read the first 7 Garnishments & Wage Deductions flashcards as text
Under Title III of the Consumer Credit Protection Act (CCPA), what is the maximum percentage of an employee's disposable earnings that a creditor garnishment can attach?
Answer: 25%
Title III of the CCPA limits creditor garnishments to the lesser of 25% of disposable earnings or the amount by which disposable earnings exceed 30 times the federal minimum wage.
How does the CCPA define 'disposable earnings' for garnishment calculation purposes?
Answer: Wages remaining after mandatory deductions required by law
Disposable earnings are the wages remaining after legally required deductions such as taxes, Social Security, Medicare, and state unemployment insurance — not voluntary deductions.
An employee has disposable earnings of $400 per week. The federal minimum wage is $7.25/hour. What is the maximum a creditor can garnish per week?
Answer: $100.00
The lesser of 25% of $400 ($100) or $400 minus 30×$7.25 ($182.50) is $100, so the maximum creditor garnishment is $100.
When an employee has both a child support withholding order and a creditor garnishment, which obligation generally takes priority?
Answer: Child support withholding order, by federal law
Federal law gives child support and spousal support withholding orders priority over all other garnishments, including creditor and tax levies in most states.
Under the CCPA, what protection does an employee receive regarding employment when subject to a single garnishment?
Answer: Employers cannot discharge the employee because of that garnishment
The CCPA prohibits an employer from discharging an employee solely because earnings have been subjected to garnishment for any one indebtedness.
For a child support withholding order, what is the maximum percentage of disposable earnings that can be withheld for an employee who is NOT supporting a second family and is 15 weeks in arrears?
Answer: 65%
An employee without a second family obligation can have up to 60% withheld for child support, plus an additional 5% when 12 or more weeks in arrears, totaling 65%.
Which federal agency issues Publication 1494 used by payroll professionals to calculate the exempt amount from an IRS tax levy?
Answer: Internal Revenue Service
IRS Publication 1494 provides the tables used to determine the amount exempt from levy based on the employee's filing status and number of claimed exemptions.