I received something in the mail saying an employee owes someone money, and they want to take it out of his wages. How much am I supposed to withhold?
When someone has a judgment or court order against them, the creditor can request a levy against wages, often called a wage garnishment, which continues until the debt is paid. Some examples of debts that may result in wage garnishment are money judgments, child support, defaulted student loans and unpaid taxes.
The employer typically receives the court or government agency order from a sheriff or process server, requiring them to withhold money from the garnishee’s paycheck and send it to the levying officer. If you receive such an order, you must fill out and return the Employer’s Return (WG-005) within 15 days.
In California, creditors cannot garnish the lesser of 1) 25 percent of a debtor’s “disposable earnings”, (wages after deductions) or 2) the amount by which such weekly “disposable earnings” exceed 40 times California’s current hourly minimum wage of $8 per hour, or $320. As an example, if your employee’s disposable wages are $1,000 a week, a creditor could garnish $250, which is the lesser of 25 percent of $1,000 ($250) and $680 ($1,000 minus $320).
Garnishments are limited to encourage employees to keep working, and to provide enough to pay for living expenses. Multiple garnishments are handled in order of priority, and the total amount garnished typically cannot exceed 25 percent. There are different rules for calculating garnishments for child support, student loans and unpaid taxes.
Child support garnishment amounts vary based on whether the garnishee is currently supporting a spouse or child who is not the subject of the order. If he or she is, a maximum of 50 percent of disposable earnings may be garnished. If not, up to 60 percent of disposable earnings may be garnished. An additional 5 percent may be garnished if the garnishee is more than 12 weeks behind on support payments.
A maximum of 15 percent of disposable earnings may be garnished for defaulted student loans, but not more than 30 times the federal minimum wage. A court judgment is not required.
Likewise, the government need not obtain a judgment to enforce a garnishment for back taxes. Maximum garnishment levels for federal taxes depend on the garnishee’s legal dependents and deduction rate. California is allowed to garnish up to 25 percent of your net wages.
As an employer, you cannot refuse to garnish wages, nor should you terminate the employee because you don’t want to comply with the order.
Mary Luros is a business law attorney with Hudson & Luros, LLP, in Napa, and can be reached at firstname.lastname@example.org. The information provided here is not legal advice, nor does it form an attorney-client relationship with the author. The author makes no representations as to the reliability or accuracy of the above information.