4.3 Garnishments, Levies, and Support Orders
Key Takeaways
- Federal Consumer Credit Protection Act limits use disposable earnings, which generally equal earnings left after legally required deductions, not after voluntary benefits.
- Ordinary creditor garnishments are capped at the lesser of 25% of disposable earnings or the amount above 30 times the federal minimum hourly wage for the applicable weekly multiple.
- Child support and alimony orders can use higher federal limits, and an extra 5% may apply when support is more than 12 weeks in arrears.
- Bankruptcy orders and federal or state tax levies are not handled with the ordinary creditor garnishment formula, and state law may require a lower withholding amount.
Why garnishments are not ordinary deductions
A voluntary deduction starts with employee authorization. A garnishment starts with a legal or equitable procedure requiring the employer to withhold earnings for a debt. DOL Fact Sheet #30 explains that wage garnishments include court orders and also certain IRS, state tax, and federal agency collection procedures. It also states that voluntary wage assignments are not garnishments.
The FPC exam can turn this into a sequence problem. A payroll system may display health insurance, 401(k), union dues, child support, and a creditor order in one deduction screen, but the law does not treat them as equal lines. The first question is what type of order was received. The next question is what pay base the order uses. Only then should you calculate a withholding amount.
Disposable earnings base
Under the federal Consumer Credit Protection Act (CCPA), disposable earnings are the earnings left after legally required deductions. DOL examples include federal, state, and local taxes, the employee share of Social Security and Medicare, state unemployment insurance taxes, and legally required retirement-system withholdings. Voluntary deductions such as health insurance, life insurance, union dues, charitable deductions, retirement plan contributions not required by law, payroll advances, and merchandise purchases usually do not reduce disposable earnings for the CCPA limit.
| Step | Ordinary creditor garnishment handling |
|---|---|
| Identify earnings | Wages, salary, commissions, bonuses, and many service-related lump sums can be earnings |
| Subtract required deductions | Taxes and other deductions required by law produce disposable earnings |
| Ignore voluntary deductions for the cap | Health, union, charity, voluntary retirement, and advances usually stay in the disposable base |
| Apply the federal cap | Lesser of 25% of disposable earnings or amount above 30 times federal minimum wage |
| Check state law | If state law allows less to be withheld, follow the lower withholding amount |
| Apply order amount and priority | Never withhold more than the order and legal limit allow |
Worked calculation: ordinary creditor order
Assume weekly gross earnings are $900. Required deductions are federal income tax $95, Social Security $55.80, Medicare $13.05, and state income tax $30. Voluntary deductions are health insurance $70 and a 401(k) contribution of $45. The employee has an ordinary creditor garnishment order for $220.
Disposable earnings are $900 - $95 - $55.80 - $13.05 - $30 = $706.15. Do not subtract the $70 health deduction or $45 401(k) contribution to find disposable earnings. The federal ordinary garnishment cap is the lesser of 25% of disposable earnings, which is $176.54, or disposable earnings above 30 times the $7.25 federal minimum wage. Thirty times $7.25 is $217.50, and $706.15 - $217.50 = $488.65. The lesser amount is $176.54, so payroll withholds $176.54, not the requested $220.
Net cash after all deductions is $900 - required taxes of $193.85 - voluntary deductions of $115 - garnishment of $176.54 = $414.61. This order did not make the health deduction illegal; it simply prevented the health deduction from lowering the garnishment cap.
Support, levies, and competing orders
Child support and alimony use different CCPA limits. DOL states that up to 50% of disposable earnings may be garnished when the worker supports another spouse or child, and up to 60% when the worker does not. An additional 5% may be withheld for support payments more than 12 weeks in arrears. Those higher limits explain why a support order can leave no room for an ordinary creditor order in the same period.
Tax levies and bankruptcy orders are different again. DOL states that the ordinary CCPA amount limitations do not apply to certain bankruptcy court orders or debts due for federal or state taxes. A federal tax levy should be processed from the levy notice and IRS exempt-amount guidance, not from the ordinary 25% formula. Payroll should not guess the priority of competing orders; Fact Sheet #30 notes that priority questions generally come from the court, agency, or governing law outside the CCPA.
Compliance traps
- Using net pay after voluntary benefits as disposable earnings.
- Treating every order as a 25% creditor garnishment.
- Forgetting weekly multiples for biweekly, semimonthly, or monthly pay periods.
- Ignoring a state law that is more protective than the federal CCPA cap.
- Firing or disciplining an employee because one debt has produced garnishment proceedings.
Pay-period and priority checks
The CCPA ordinary limit is stated in weekly terms, but payroll often pays biweekly, semimonthly, or monthly. DOL guidance applies multiples of the weekly restrictions when the pay period covers more than one week. That is why a biweekly ordinary garnishment uses 60 times the federal minimum wage as the protected threshold before comparing the result with 25% of disposable earnings. Priority also matters.
A child support order already using a higher support limit can block all or part of a later ordinary creditor order, even when the creditor order would have produced a withholding amount by itself. If an order arrives with a start date, stop date, remittance address, case number, administrative fee, or maximum arrears instruction, those details are part of processing control. The FPC-level calculation usually supplies simplified facts, but the best answer still respects order type, priority, cap, and state-law lower limits.
Final exam cue
When an item says garnishment, write the order type above the math. Disposable earnings and net pay are related, but they are not the same number.
For an ordinary creditor garnishment, which amount is generally used to begin the federal CCPA limit calculation?
Weekly disposable earnings are $500 and the employee has an ordinary creditor garnishment. Using the federal CCPA general cap and a $7.25 federal minimum wage, what is the maximum weekly garnishment?
Which order type should not be processed with the ordinary 25% creditor garnishment formula?