Wage Garnishment at Work: Employer Duties, Limits, and Priority

When a garnishment order arrives, the employer becomes a collection agent for someone else's judgment — and it takes on liability if it gets the arithmetic wrong. Federal law caps how much of an ordinary garnishment can come out of a paycheck and forbids firing an employee over a single debt. Everything else depends on what kind of debt it is and which state the employee works in. Ignoring the order is the one option that is never available.

What the employer must do first

1. Date-stamp the order on arrival. Response deadlines run from service, and they are short — commonly measured in days, set by state rule or by the order itself.
2. Identify the type. A creditor writ, an income withholding order for support, an administrative student loan garnishment and a federal tax levy each carry different limits and different priority.
3. Answer the court or agency. Most orders require a written response confirming whether the person is employed and what will be withheld. Failing to answer can make the employer liable for the entire judgment.
4. Notify the employee. Provide the copy the order requires and point to the exemption-claim process, which belongs to the employee, not the employer.
5. Calculate on disposable earnings. Apply the lower of the federal and state limits for each pay period rather than a fixed dollar figure carried forward.
6. Remit on schedule and stop on release. Withholding continues until the order is satisfied, released or terminated, and the employer must report separation of employment.

Watch out: An employer that withholds nothing because it disagrees with the debt, or that lets the order sit in a drawer, can be held liable for the amount that should have been withheld — sometimes for the whole judgment. The place to raise a defense is the court, and it is the employee's to raise.

Disposable earnings and the federal cap

The governing provision is Title III of the Consumer Credit Protection Act, at 15 U.S.C. § 1673. For an ordinary garnishment — a judgment on a credit card, a medical bill, a car deficiency — the maximum that may be taken in a workweek is the lesser of two amounts: 25 percent of disposable earnings, or the amount by which disposable earnings exceed thirty times the federal minimum hourly wage.

The second limb is a floor rather than a percentage. It guarantees that a low-earning worker keeps a baseline amount of pay entirely. Because it is tied to the federal minimum wage, the dollar figure changes whenever that wage does, so the current amount should be taken from the Wage and Hour Division rather than from any secondary source.

Disposable earnings is the term that causes most errors. It means gross pay less deductions required by law — federal, state and local income tax, Social Security and Medicare, and mandatory retirement contributions where they apply. It is not take-home pay. Voluntary deductions do not reduce the base: health insurance premiums, retirement savings, union dues, life insurance and charitable giving all come out after the garnishment calculation, not before.

Note: Title III covers earnings broadly — wages, salary, commissions, bonuses and periodic pension or retirement payments. Enforcement of the garnishment restrictions sits with the Wage and Hour Division, and worked examples are kept in its fact sheet library.

Debts with their own rules

Support orders arrive on a standardized federal income withholding form used in every state, which tells the employer when to begin, how often to remit, and where to send payment. Employers must also report a lump-sum payment such as a bonus in many states, and must notify the issuing agency when the employee leaves. A parallel notice can require enrolling a child in the employer's health plan, a mechanism explained in our article on health insurance for children after separation.

Priority when several orders land

Two orders can easily exceed what the law allows to be withheld. Priority rules decide who gets paid.

Child support generally comes first. Where more than one support order exists and the total exceeds the applicable percentage, states use an allocation method — usually pro rata by current support amount — rather than paying one order in full and the other not at all. Federal tax levies rank ahead of most creditor garnishments, though a support order already in place when a levy is served is normally honoured first. Among ordinary creditor garnishments, most states apply a first-in-time rule, holding a second writ until the first is satisfied; a minority allow simultaneous partial withholding.

The total may never exceed the applicable cap. If a support order already consumes the maximum, a creditor garnishment yields nothing that period, and the employer should say so in its answer to the court rather than exceeding the limit.

Many states let the employer deduct a small administrative fee for processing each order. It is a state-by-state figure, it is usually capped, and it must not push the withholding above the legal maximum.

State limits and the anti-discharge rule

The federal cap is a ceiling on what may be taken, not a guarantee that it may be taken. Where a state protects more of a worker's pay, the state rule governs, and the employer must apply whichever calculation leaves the employee with more.

The variation is dramatic. Texas, Pennsylvania, North Carolina and South Carolina are frequently cited as states that do not permit wage garnishment for ordinary consumer debts at all, allowing it only for categories such as support, taxes and student loans. Other states cap the percentage below the federal figure, or tie the protected floor to a multiple of the state minimum wage, which is higher than the federal one in most of the country. Several states also provide a head-of-household exemption that an employee must claim through the court.

Federal law separately protects the job. An employer may not discharge an employee because earnings have been subject to garnishment for any one indebtedness. That protection is narrower than it looks: it does not, by its terms, cover an employee with garnishments from two or more separate debts. A number of states have filled that gap with broader anti-retaliation rules, so the state statute is worth checking before acting on a second order.

Employees who believe an order was calculated wrongly, or who want to claim an exemption, raise it with the issuing court or agency rather than with payroll. Guidance on debt collection practices generally, including what a collector may and may not do while a judgment is being enforced, is available from the Consumer Financial Protection Bureau.

Common questions

Can I be fired because of a garnishment?

Not for a first debt. Federal law prohibits discharging an employee because earnings have been garnished for any one indebtedness, and the Wage and Hour Division enforces it. The protection does not expressly extend to a second or third separate debt, which is where state law becomes decisive — several states prohibit discharge regardless of the number of orders. Check the state rule before assuming either way.

Why is more coming out than 25 percent of my paycheck?

Three likely reasons. The calculation is made on disposable earnings, which is gross pay less legally required deductions rather than take-home pay, so the base is larger than the net figure on the statement. A support order permits a substantially higher percentage. And a federal tax levy sits outside the cap entirely, using an exempt-amount table instead. Ask payroll which type of order it is applying.

Does the employer have to tell me before withholding starts?

The employee receives notice, but the source varies. A creditor garnishment normally involves notice from the court or the creditor with instructions for claiming exemptions, and most states also require the employer to deliver a copy. Support withholding orders come with their own notice. Employers should provide the copy promptly, because the exemption claim window is short and it belongs to the employee alone.

What happens to the order if I change jobs?

The employer must notify the issuing court or agency that employment has ended, usually including the last known address and any new employer it knows of. Creditor garnishments generally do not follow automatically; the creditor must serve the new employer. Support withholding follows quickly, because state agencies use new-hire reporting to locate employment. Quitting does not extinguish the underlying debt or judgment.

Handling one correctly

For payroll, the safe sequence is: log the service date, classify the order, respond in writing by the deadline, calculate on disposable earnings against both the federal and state limits, apply priority rules if more than one order exists, remit on the schedule stated, and close the file only on a written release or satisfaction. Keep the calculation worksheet for each pay period, since that is the document an auditor or a court will ask for. Payroll rules that interact with the cap — tip credits and service-charge distributions, for instance — are described in our explainer on tip pooling and service charges, and they affect what counts as earnings.

For employees, the first move is to read the order for the case number and the issuing court, then find out whether an exemption applies. Head-of-household status, low income and the source of the funds can all reduce or eliminate withholding, but only if claimed in time. Where the debt is a defaulted federal student loan, the separate administrative remedies described in our article on student loan default and rehabilitation can stop garnishment without going to court. If money has also been taken from a bank account, different exemptions apply there, as our explainer on account freezes and exempt funds sets out. Employers should keep the internal procedure out of general staff policy documents, for the drafting reasons in our guide to employee handbooks.