“What the CCPA wants to do is make sure that not too much is being taken out from a debtor’s paycheck each week, because that then just results in more financial issues and more strains.

In episode #124 of Mission to Grow, the Asure podcast that serves as small business owners’ guide to cash, compliance, and the War for Talent, Principal at Jackson Lewis P.C., Brian Shenker, sits down with host Mike Vannoy to discuss the complexities surrounding garnishments in the workplace, including the differences between wage garnishments and wage assignments, how employers should handle multiple garnishments and the legal implications of terminating an employee due to garnishment. Brian discusses how to navigate these situations while ensuring compliance with federal and state laws.

Takeaways:
  • Employers must follow the garnishment order carefully to avoid legal consequences, including paying off an employee’s judgment if done incorrectly.
  • Federal and state laws: Employers need to be aware of both federal guidelines and state-specific laws, which can vary.
  • Garnishment calculation:
    • Maximum garnishment: The CCPA caps garnishments at the lesser of 25% of disposable income or the amount by which weekly disposable income exceeds 30 times the federal minimum wage.
    • Disposable income: Defined as earnings after legally required deductions (like taxes, Social Security), not after voluntary deductions like health insurance or retirement contributions.
    • Garnishments are not allowed for employees with disposable earnings of $217 or less per week.
    • For earnings above that threshold, only a portion (25%) of the disposable income is subject to garnishment.
  • Commissions and bonuses: These also fall under the garnishment rules. Commission-based employees are subject to garnishment just like salaried workers, but their earnings can vary, making the calculation more complex.
  • Fringe benefits: Generally, fringe benefits like free daycare are not considered part of the garnishable income.
  • Independent contractors: The CCPA typically applies to employees, but some states extend garnishment protections to independent contractors as well. Employers should not ignore garnishment orders for independent contractors, even if state laws vary on this issue.
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