A wage garnishment is a court order requiring an employer to withhold a set amount of an employee’s pay and send it to the person or institution named in the order. Wage garnishments are issued when an employee has an outstanding debt for child support, student loans, or unpaid taxes, or when an employee has lost a court judgment and has been ordered to pay damages. The rules for how garnishments work and how much money can be withheld depend on the reason for the garnishment.
Wage Garnishments for Court Judgments
If an employee loses a lawsuit and is ordered to pay damages, the person or entity that won the lawsuit can garnish the employee’s wages by providing a copy of the court order to the local sheriff or marshal, who will send it to the employer. The employer must then notify the employee of the garnishment, begin withholding part of the employee’s wages, send the garnished money to the creditor, and give the employee information on how to protest the garnishment.
Unless an employee owes child support, back taxes, or student loans, creditors must get a court order before they can garnish an employee’s wages. If an employee has defaulted on a loan, stopped paying a credit card bill, or run up huge medical bills, those creditors can't just start garnishing the employee’s wages. They must first file and win a lawsuit against the employee and get a court order requiring the employee to pay the debt.
For court judgments, the maximum amount that can be garnished is 25% of the employee’s disposable earnings (what's left after mandatory deductions) or the amount by which the employee’s wages exceed 30 times the minimum wage, whichever is lower. Some states set a lower percentage limit.
An employee may not be fired or otherwise retaliated against because of a wage garnishment to pay one debt. Less protection is available if more garnishments are in play. Under federal law, an employee whose wages have been garnished by more than one creditor is not protected from retaliation, nor is an employee who is subject to more than one garnishment by the same creditor. Some states offer more protection.
To protest a wage garnishment based on a court judgment, the employee must file papers with the court to get a hearing date. At the hearing, the employee must present evidence that the garnishment is leaving the employee less than he or she needs to pay living expenses. The judge can terminate the garnishment or leave it in place.
Wage Garnishments for Child Support and Alimony
Since 1988, all child support orders include an automatic wage withholding order. (If child support and alimony are combined into one family support payment, the wage withholding order applies to the whole amount owed; however, orders involving only alimony don't result in automatic wage withholding.) Once the court issues a child support order, the court or the child's other parent sends a copy of the order to the debtor’s employer, who will withhold the ordered amount from the employee’s paycheck and send it to the other parent. If the employee is required to maintain health insurance coverage for the child, the payment for that will be deducted as well.
More of an employee’s paycheck can be taken to pay child support. Up to 50% of the employee’s disposable earnings may be garnished to pay child support if the employee is currently supporting a spouse or a child who isn't the subject of the order. If the employee isn’t supporting a spouse or child, up to 60% may be taken. An employee may not be fired, disciplined, or otherwise retaliated against because of a wage withholding order to pay child support.
Wage Garnishments for Student Loans
In 2006, Congress passed a law that allows the U.S. Department of Education (or any agency trying to collect a student loan on its behalf) to garnish up to 15% of an employee’s pay if the employee is in default on a student loan. No lawsuit or court order is required for this type of garnishment.
At least 30 days before the garnishment is set to begin, the employee must be notified in writing of:
- the amount of the debt
- how to get a copy of records relating to the loan
- how to enter into a voluntary repayment schedule, and
- how to request a hearing on the proposed garnishment.
The law specifies only one basis for objecting to the garnishment: that the employee returned to work within the past 12 months after being fired or laid off.
Wage Garnishments for Back Taxes
The IRS can take a huge chunk of an employee’s wages, and it doesn't have to get a court order first. The amount the employee gets to keep depends on how many dependents the employee has and the employee’s standard deduction amount. The employer will pay the employee a fairly low minimum amount each week and give the rest to the IRS.
State and local tax agencies also have the right to take employee wages. In many states, however, the law limits how much the taxing authority can take.