Title III of the Consumer Credit Protection Act is the federal law that restricts the amount of your wages that can be garnished for non-government debts. A number of states, including California, enact their own garnishment laws that set stricter withholding limits. If both federal and state garnishment laws apply to you, your employer must use the law that gives you the most protection.
Withholding Amount for Ordinary Creditors
Under California law, for regular creditor garnishments, your employer can withhold no more than the smaller of 25 percent of your disposable wages or the amount by which your disposable wages exceed 40 times the state minimum wage. Title III of the CCPA requires the lesser of 25 percent of your disposable pay or the amount by which your disposable wages represent more than 30 times the federal minimum wage. As of 2014, the federal minimum wage is $7.25 per hour. California’s minimum wage is $8 per hour. Because the multiplier in California is 40 instead of 30, you would get more protection from California law than federal law if your wages are near minimum wage.
Garnishment for Delinquent Taxes
If you fail to pay your California income taxes, the California Franchise Tax Board can garnish up to 25 percent of your disposable wages, which is your income after legally required deductions. The Internal Revenue Service can garnish your wages for unpaid federal taxes. The IRS does not set a specific garnishment limit. Instead, it requires that your employer use Publication 1494 to figure how much of your wages you can keep.
Unpaid Federal Student Loans
If you do not repay a federal student loan, the U.S. Department of Education can garnish 15 percent of your disposable income, up to 30 times the federal minimum wage. Your employer can fulfill garnishments for multiple federal loans simultaneously, provided the total does not exceed the legal limit.
Child Support and Alimony Orders
The court decides the amount someone should pay for child support or alimony. In California, deciding factors include how much both parties earn and have the potential to earn, the number of children they have together, health insurance costs, and whether they’re supporting children from other relationships. Under the Consumer Credit Protection Act, an employer can withhold up to 65 percent for child support or alimony. In California, an employer can withhold no more than 50 percent for support orders.
What You Can Do
You can try to negotiate with the creditor by settling the debt or agreeing to a payment arrangement. Depending on the situation, the judge may either stop the wage garnishment or set a smaller withholding amount. If the garnishment will cause you or your family financial hardship, you can file a claim of exemption to protect all or some of your wages. File your claim promptly after receiving a copy of the wage garnishment from your employer. The garnishment paperwork has the instructions for forwarding your claim to the levying officer. You must forward a financial statement with your claim proving that you need your wages for support yourself or your family. If the judge accepts your claim, he will either stop the garnishment or designate a smaller withholding amount.
- U.S. Department of Labor: Wage Garnishment
- Nolo: California Wage Garnishment Law
- State of California: Wage Garnishment: Exempt Earnings
- IRS.gov: Publication 1494
- California Courts: Child Support
- California Courts: California Child Support - A Guide for Business
- California Courts: Employee Instructions
- California Courts: If You Do Not Pay Your Judgment
Grace Ferguson has been writing professionally since 2009. With 10 years of experience in employee benefits and payroll administration, Ferguson has written extensively on topics relating to employment and finance. A research writer as well, she has been published in The Sage Encyclopedia and Mission Bell Media.