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What Is Wage Assignment?

Definition and example of wage assignment, how wage assignment works, wage assignment vs. wage garnishment.

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A wage assignment is when creditors can take money directly from an employee’s paycheck to repay a debt.

Key Takeaways

• A wage assignment happens when money is taken from your paycheck by a creditor to repay a debt.
• Unlike a wage garnishment, a wage assignment can take place without a court order, and you have the right to cancel it at any time.
• Creditors can only take a portion of your earnings. The laws in your state will dictate how much of your take-home pay your lender can take.

A wage assignment is a voluntary agreement to let a lender take a portion of your paycheck each month to repay a debt. This process allows lenders to take a portion of your wages without taking you to court first.

Borrowers may agree to allow a lender to use wage assignments, for example, when they take out payday loans . The wage assignment can begin without a court order, although the laws about how much they can take from your paycheck vary by state.

For example, in West Virginia, wage assignments are only valid for one year and must be renewed annually. Creditors can only deduct up to 25% of an employee’s take-home pay, and the remaining 75% is exempt, including for an employee’s final paycheck.

If you agree to a wage assignment, that means you voluntarily agree to have money taken out of your paycheck each month to repay a debt.

State laws govern how soon a wage assignment can take place and how much of your paycheck a lender can take. For example, in Illinois, you must be at least 40 days behind on your loan payments before your lender can start a wage assignment. Under Illinois law, your creditor can only take up to 15% of your paycheck. The wage assignment is valid for up to three years after you signed the agreement.

Your creditor typically will send a Notice of Intent to Assign Wages by certified mail to you and your employer. From there, the creditor will send a demand letter to your employer with the total amount that’s in default.

You have the right to stop a wage assignment at any time, and you aren’t required to provide a reason why. If you don’t want the deduction, you can send your employer and creditor a written notice that you want to stop the wage assignment. You will still owe the money, but your lender must use other methods to collect the funds.

Research the laws in your state to see what percentage of your income your lender can take and for how long the agreement is valid.

Wage assignment and wage garnishment are often used interchangeably, but they aren’t the same thing. The main difference between the two is that wage assignments are voluntary while wage garnishments are involuntary. Here are some key differences:

Once you agree to a wage assignment, your lender can automatically take money from your paycheck. No court order is required first, but since the wage assignment is voluntary, you have the right to cancel it at any point.

Wage garnishments are the results of court orders, no matter whether you agree to them or not. If you want to reverse a wage garnishment, you typically have to go through a legal process to reverse the court judgment.

You can also stop many wage garnishments by filing for bankruptcy. And creditors aren’t usually allowed to garnish income from Social Security, disability, child support , or alimony. Ultimately, the laws in your state will dictate how much of your income you’re able to keep under a wage garnishment.

Creditors can’t garnish all of the money in your paycheck. Federal law limits the amount that can be garnished to 25% of the debtor’s disposable income. State laws may further limit how much of your income lenders can seize.

Illinois Legal Aid Online. “ Understanding Wage Assignment .” Accessed Feb. 8, 2022.

West Virginia Division of Labor. “ Wage Assignments / Authorized Payroll Deductions .” Accessed Feb. 8, 2022.

U.S. Department of Labor. “ Fact Sheet #30: The Federal Wage Garnishment Law, Consumer Credit Protection Act's Title III (CCPA) .” Accessed Feb. 8, 2022.

Sacramento County Public Law Library. “ Exemptions from Enforcement of Judgments in California .” Accessed Feb. 8, 2022.

District Court of Maryland. “ Wage Garnishment .” Accessed Feb. 8, 2022.

Wage Assignments in Consumer and Other Contracts

Most of the time an employee knows when his wages are about to be garnished: He is sued, the court enters a judgment against him for the amount owed, and thereafter a wage garnishment order ensues. The employee has plenty of time to plan for it, forewarn his employer, and make the process as palatable as possible, should a repayment arrangement not be possible.

Not so for many of the so-called “voluntary” wage assignments that are being included in consumer credit and loan agreements with greater regularity than ever before. These provisions allow the creditor to skip the formality, delay, and expense of the legal process altogether, and go straight to the employer with a demand for garnishment.

An employee typically does not learn about this kind of garnishment until after the garnishment has taken place and he notices his pay check is short.

Technically speaking, a wage assignment is a provision in a private agreement — often a consumer credit agreement like the ones used in buying a refrigerator.

The “wage assignment” provision assigns the borrower’s future wages to the creditor in the event of default by non-payment. If a default occurs, the creditor in effect forecloses on the security (the wages) by sending a garnishment demand to the employer. Usually, the letter is written by the creditor’s attorney or billing department.

Most garnishments are based on a judgment or court order and constitute official orders of the court. The request for garnishment is made to the court and the court grants the request by issuing a garnishment order. This is the case for most wage garnishments for child support.

Types of Voluntary Wage Assignments

Voluntary wage assignments, often simply called “wage assignments,” are those that the indebted employee enters into by agreement. He may agree to it by signing a consumer credit or loan agreement, or he may agree to repay a debt by entering into a repayment agreement with a wage assignment provision.

Considering these wage assignments as “voluntarily” is a stretch. Most borrowers don’t read the fine print in consumer contracts and loan papers, have no bargaining strength to oppose these provisions even if they want to, and don’t learn about the wage assignment until it is too late to do anything about it.

In 1970, Congress passed Title III of the Consumer Credit Protection Act. Under that Act, the federal government took control over wage garnishment proceedings for the first time.

Generally speaking, this law limits the extent to which earnings can be garnished to 25% of “disposable earnings” or to amounts above 30 times minimum wage, whichever is less. It also prohibits the employer from terminating an employee for any wage garnishment based on a single debt.

Importantly, the permitted deductions DO NOT include sums withheld as part of a voluntary wage assignment; as such deductions are not legally required. What this means is that wage garnishment protections do not take into account the effect of voluntary wage assignments. Also, they do not apply to real estate purchases (which have specific contracts).

Furthermore, because wage assignments are not technically considered garnishment under federal law, an employer can lawfully terminate an employee for a single garnishment based on a voluntary wage assignment. Put another way, the anti-termination protections of federal law do not apply to wage assignments.

State Law Limitations on Wage Assignments

Many states have passed laws making wage assignments invalid, due to their intrusive and potentially devastating effect on borrowers. Some states bar any form of wage assignment, while others limit wage assignments to only child or spousal support.

Citations/references

Federal statute: title iii, consumer credit protection act (ccpa), 15 usc, §§1671 et seq., code of federal regulations: 29 cfr part 870, u.s. wage and hour division: fact sheet #30 – the federal wage garnishment law, consumer credit protection act’s title iii (ccpa), field operations handbook – 02/09/2001, rev. 644, chapter 16, title iii – consumer credit protection act (wage garnishment), summary of state laws on garnishment: http://www.nolo.com/legal-encyclopedia/free-books/employee-rights-book/chapter2-9.html.

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Florida Wage Garnishment Laws

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Florida Wage Garnishment Limits

Wage garnishment has its boundaries defined by federal regulations, designed to ensure that a substantial portion of your earnings remains untouched for your essential living expenses. Although some states impose their own stricter garnishment limits, Florida adheres to the federal guidelines. Here are the rules:

If someone you owe money to tries to take some of your pay, they can only take 25% of what’s left after taxes and other deductions, or the amount that’s over 30 times the federal minimum wage – whichever is smaller. In Florida, if you earn less than 30 times the federal minimum wage after deductions, they can’t take any of your pay. ( Fla. Stat. Ann. § 222.11 )

What is a Wage Garnishment?

Garnishment occurs when a creditor takes legal action to seize a portion of your wages, bank account, or other assets. In wage garnishment cases, the creditor will contact your employer and have your employer deduct a specified amount of money from your check each week to be forwarded to the creditor. Wage garnishments can be particularly devastating to debtors (borrowers) because the writ of garnishment is continuing. Therefore, a single writ of garnishment can continue to garnish wages until the full amount of the debt is paid. Fortunately, debtors in Florida do have many legal options to prevent or stop a wage garnishment. If you are threatened with a wage garnishment or your wages are already being garnished, contact a  Florida wage garnishment attorney  in the Tampa Bay area for help.

How Can a Creditor Garnish My Wages?

Most creditors will not be permitted to seek a wage garnishment until they have first obtained a judgment (court order) allowing them to collect the debt. However, unpaid income taxes, court ordered child support, and student loans are the exception to this rule, they will not be required to obtain a judgment prior to seeking garnishment. Creditors will have up to 20 years to collect the funds owed under a judgment. See  Florida Statute 55.081 . The statute of limitations to collect on a judgment is substantially longer than most other debts. The statute of limitations on most other debts is typically only 5 years. See  Florida Statute 95.11 .

How Can I Stop a Florida Wage Garnishment?

If you have been notified that your wages will be garnished, you will need to act quickly. The time from the judgment until the garnishment begins can be as little as a few days. Contact a Florida Wage Garnishment Attorney as soon as possible to discuss your options and the possible exemptions you may qualify for.

Head of Household Exemption in Florida:

Under Florida Statute 222.11, if you qualify as a head of household, you may be legally entitled to stop a wage garnishment. The head of a household is someone who pays at least 50% of the living expenses for a dependent. The term “dependent” in head of household cases is broad and can include many different types of situations, children are not the only type of dependent that will qualify under the law. For instance, dependent may include an aunt, uncle, parent, or even a former spouse receiving alimony .

It is important to note, the head of household exemption does not protect tax refunds from garnishment. Tax refunds are not considered wages, thus they are not protected under the head of household statute.

What Are Other Exemptions That Can Stop Garnishments?

Head of household is not the only exemption that can be used to stop a garnishment. For instance, exemptions to garnishments may also include social security benefits, welfare, workers’ compensation, veterans’ benefits, pensions, life insurance benefits, and disability income benefits.

Alternatively, the debtor may be able to file a lawsuit to vacate the judgment. If the judgment is vacated, the previous court order granting the judgment to the creditor will be null and void. Whether vacating a judgment will be a successful option depends on the facts and circumstances of each case. If you think you may have legal grounds to vacate a judgment, contact a wage garnishment lawyer for assistance.

Federal Protection From Garnishment:

Under  Federal law 15 U.S.C. 1673 , garnishments may not exceed 25% of a debtor’s disposable income. This protection applies to all debtors, not just those you qualify as head of household. This limit applies to the total amount of garnishments; thus, even if a debtor is facing multiple garnishments, the total garnishment may not exceed 25%. However, the garnishment may exceed 25% of the debtor’s disposable income if the disposable income exceeds 30 times the federal minimum wages per week. In these cases, the garnishment will be limited to the lesser of either 25% of the debtor’s disposable income or 30 times the federal minimum wages per week.

Procedure to Stop Wage Garnishments in Florida:

When a creditor seeks a garnishment, the clerk of the court must send notice to the debtor regarding the garnishment. The notice must inform the debtor of the garnishment and the right to file an exemption. The debtor must file any exemptions to the garnishment within 20 days of receiving the notice. See  Florida Statute 77.041 . Additionally, the creditor must send the debtor notice of the garnishment. The notice must be sent first class mail within 5 business days of the writ of garnishment being issued.

If the debtor timely files a claim of exemption and request for a hearing, the creditor will 14 business days from the date they are served a copy of the exemption by mail to file a sworn written statement that answers the debtor’s claim of exemption. The claim of exemption and request for a hearing is hand-delivered, the creditor will only have 8 business to respond. If the creditor fails to timely respond to the debtor’s claim of exemption, the court will automatically cancel the garnishment. A court hearing will not be necessary to dismiss the garnishment.

Incorrect Garnishment Judgment:

If the debtor believes that the garnishment judgment was made in error, the judgment can then be contested. It is important to hire a Florida Wage Garnishment Attorney for the best way forward, if you have already completed payments for the debt, if it was included and then discharged in a bankruptcy or if it never belonged to you in the first place.

Using Bankruptcy to Stop Garnishment:

Immediately after a Chapter 7 or Chapter 13 bankruptcy case is filed an  automatic stay  will be enacted. The automatic stay requires all collections efforts to immediately stop, including garnishments. The automatic stay is often the quickest way to stop a wage garnishment. Unlike filing for the head of household exemption, you do not have to wait weeks or months for a court hearing to stop the garnishment. Instead, the garnishment must be stopped as soon as the bankruptcy case is filed.

Additionally, you may be able to discharge the judgment in your bankruptcy case. The discharge is a court order releasing you from all personal liability on the debt. This is important because the head of household process does not eliminate the debt, it only temporarily stops the garnishment.

Contact a Florida Wage Garnishment Attorney Today

If you are threatened with a wage garnishment or your wages are already being garnished, contact Florida Law Advisers, P.A., to schedule a consultation with a Florida wage garnishment attorney. Our initial consultation is free and we offer flexible payment options. At Florida Law Advisers, P.A., we take an aggressive approach to stopping wage garnishments. We understand how devastating wage garnishments can be to a family, and we vigorously fight to defend our client’s rights. Call us today to speak with a wage garnishment lawyer, we are available to answer your calls 24/7.

Frequently Asked Questions

File a claim for exemptions and request for a court hearing. The Claim must be filed with the court and sent to the bank’s attorney as well. Usually, 4-10 weeks later there will be a court hearing to determine if the claim of exemptions will be granted. The garnishment will continue while you wait for the court hearing.

The automatic stay will be put into effect the instant a Chapter 13 or Chapter 7 case is filed. Generally, the automatic stay will remain in effect throughout the duration of the case. However, creditors may be granted relief from the stay, with approval from the court.

A Chapter 7 or Chapter 13 case will put an immediate stop to a wage or bank account garnishment. In some cases, a head of household exemption may also stop a garnishment. However, the exemption will typically require a few weeks to take effect and the creditor will still be able to pursue other forms of collection, including future garnishments.

Chapter 7 or Chapter 13 bankruptcy will put an immediate stop to a wage or bank account garnishment. You will not have to wait for a court hearing, the garnishment will be stopped instantly when the bankruptcy is filed.

Florida law only requires the lender to mail notice, it does not require they prove you received it. Therefore, most borrowers will not receive any notice until they see the money missing from their pay check.

At Florida Law Advisers, P.A., we are committed to solving your divorce, bankruptcy, and immigration matters. We are a full-service law firm serving clients in Tampa, Hillsborough County, Orlando, and throughout Central Florida.

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Wage assignment and employers’ responsibilities

Tough economic times raise some tricky HR issues—for example, when an employee’s financial straits begin to affect his employer.

Must we honor a payday loan wage assignment?

Q. An employee borrowed money from a payday loan service at a very high interest rate that I feel is unfair. The payday loan service sent me a “wage assignment” notice and told me that our company must withhold money from his paychecks.  What is a wage assignment, and does our company actually have to honor it? A. A wage assignment is a document that allows a creditor to attach part of the employee’s wages if the employee fails to pay a specific debt. The creditor does not have to obtain a judgment in a court proceeding before requesting payment. Under the Illinois Wage Assignment Act (740 ILCS 170), private employers are obligated to honor a creditor’s properly served demand for a valid wage assignment, unless an employee presents a timely, valid , written defense to the wage assignment.

What constitutes a valid assignment?

Q. How can I tell if a wage assignment is valid? How long is it valid? A. A valid wage assignment document must have the words “Wage Assignment” printed or written in boldface letters of not less than ¼ inch in height at the head of the wage assignment and one inch above or below the line where the employee signs the assignment. The employee must have signed the document in person, and the document must show the date of execution, the employee’s Social Security number, the name of the employer at the time of execution, the amount of money loaned or the price of the articles sold or other consideration given, the rate of interest or time-price differential to be paid, if any, and the date on which such payments are due. A wage assignment is valid for no more than three years after the employee signs it and the employer’s name appears on it. If the employee changes jobs, the wage assignment is valid for two years, even though the new employer’s name does not appear on the assignment.

Handling wage assignments

Q. How does the wage assignment process start? A. Assuming that the wage assignment document complies with the formal requirements, the creditor must serve “demand to withhold” on the employer. The demand is valid only if:

The employee has defaulted on the debt secured by the assignment for more than 40 days, and the default has continued to the date of the demand.

The demand contains a correct statement of the amount the employee is in default, and the creditor provides an original or a photocopy of the assignment to the employer.

The creditor has served a “notice of intention to make the demand” upon the employee, with a copy to the employer, by registered or certified mail not less than 20 days before serving the demand.

Putting on the brakes

Q. Can an employee stop the wage assignment process? A. The employee does have a right to contest the demand. If an employee has a legal defense to the wage assignment, the employee may—within 20 days after receiving a notice of demand or within five days after the employer is served with the demand—notify the employer, in writing, of any defense to the wage assignment and send a copy of the written defense to the creditor by registered or certified mail.   As a result, the employee’s wages are not subject to a demand served by the creditor unless the employer receives a copy of a subsequent written agreement between the creditor and the employee authorizing such payments. Similarly, if the creditor receives a copy of the defense prior to serving its demand upon the employer, the creditor may not serve the demand upon the employer.  Whether the employee’s defense is legally valid is not an issue the employer must resolve. Instead, the employee and the creditor may attempt to reach another agreement or the creditor may simply bring a separate lawsuit against the employee to collect an outstanding debt. 

Calculating the wage assignment payment

Q. How much must the employer withhold—and when? A. The employer must begin payment to the creditor no sooner than five business days after service of such a demand.  The employer must withhold the lesser of:

15% of weekly gross wages

The amount by which the disposable earnings for a week (pay remaining after federal and state taxes, Social Security deductions and any other amounts required by law to be withheld, including required retirement contributions) exceed 45 times the federal minimum wage, unless a notice of defense is received within that five-day period.

The employer shall be paid a fee of $12 for each wage assignment. That $12 is credited against the debt.

WHAT TO READ NEXT

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What Is a Wage Assignment?

How wage assignment works.

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Wage Garnishment

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• Debt Management

Wage Assignment: What It Means, How It Works

Wage assignment is the act of taking money directly from an employee's paycheck in order to pay back a debt obligation. Such an automatic withholding plan may be used to pay back a variety of debt obligations, including back taxes, defaulted student loan debt, and both child and spousal support payments.

Key Takeaways

• A wage assignment takes funds directly from an employee's paycheck to pay back a debt.
• How wage assignments are regulated varies by state, with some states even allowing for voluntary child support agreements.
• A wage garnishment is an involuntary deduction and requires a court order.

Wage assignments are typically incurred for debts that have gone unpaid for a prolonged period of time. Employees may sometimes opt for a voluntary wage assignment to pay for things like union dues or to contribute to a retirement fund.

A wage assignment is processed as part of an employer's payroll procedure. The employee's paycheck is decreased by the amount of the assignment and noted on their pay stub.

A wage assignment is often a lender's last resort to receive repayment from a borrower who has previously failed to pay a debt obligation.

Wage assignments are a valuable tool for collecting unpaid debts, but unfortunately, they may be associated with abusive lending practices . If you're struggling with your debt, one of the best debt relief companies or credit counseling agencies may be able to help you get back on track before a wage assignment is incurred.

What Makes Wage Assignments Voluntary?

In a voluntary wage assignment, a worker essentially asks their employer to withhold a portion of their paycheck and send it to a creditor to pay off a debt. Loan agreements may sometimes include a voluntary wage assignment clause in their terms should the borrower default on their loan.

Payday lenders often include voluntary wage assignments into their loan agreements to better their chances of being repaid. Laws regarding wage assignments vary by state.

For example, in West Virginia, wage assignments are capped at 25% of a worker's take-home earnings, the employee and the employer must sign the agreement, and agreements must be renewed annually. Under Illinois law, a lender cannot resort to wage assignment until a debt is 40 days in default. The wage assignment cannot continue for more than three years, and the worker can stop the wage assignment at any time.

Involuntary wage deductions, known as wage garnishments , require a court order and are most likely to be employed to collect spousal and child support payments that have been ordered by a court. Wage garnishments may also be used to collect unpaid court fines or student loans that have been defaulted on.

Several states allow individuals to sign up for voluntary child support agreements. In such a case, both parents must agree to a plan. Once that happens, a voluntary wage assignment may begin. If a child support or welfare agency is involved, they would have to approve any plan.

How Long Can I Have a Wage Assignment?

Since wage assignments are voluntary, the length of time that you use one can vary. Some loans include a wage assignment agreement, so you'll have to check the language of your loan to determine your obligation. Each state also has its own regulations regarding wage assignments.

How Much of My Income Can Go to Wage Assignments?

Every state has its own regulations, but typically 15–25% of your disposable income can be designated for wage assignments.

Is Wage Garnishment the Same as Wage Assignment?

While they are similar, wage garnishment and assignment are not the same. Wage garnishment is an involuntary paycheck deduction, typically ordered to repay child support, student loans, tax debt, or bankruptcy. A wage assignment is voluntary and may be used to repay a consumer debt.

Wage assignments may be a useful tool to help you pay down a debt. Wage assignments are voluntary but they may be hidden in the fine print of some loan products, so read everything carefully before signing. Check the regulations in your state to determine if your wage assignment is revocable.

West Virginia Division of Labor. " Wage Payment and Collection (WPC) Act: Payroll Deductions and Wage Assignments ," Page 3.

Illinois General Assembly. " (740 ILCS 170/) Illinois Wage Assignment Act ."

U.S. Department of Labor. " Fact Sheet #30: The Federal Wage Garnishment Law, Consumer Credit Protection Act's Title III (CCPA) ."

Illinois Legal Aid. " Understanding Wage Assignment ."

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Voluntary Wage Assignments and Why You Should Avoid Them At All Costs

You would never hand over your paycheck to a creditor, would you?  Of course if you were under threat or order by a court you may hand over your paycheck; but never voluntarily. Right? Well, surprisingly many debtors do just that when they agree to “voluntary wage assignments.” A voluntary wage assignment is an agreement between a creditor and debtor that says the lender can deduct a certain amount of money from the debtor’s paycheck to repay a loan.

Voluntary wage assignments are commonly used by payday lenders. Surprised? You shouldn’t be.  Payday lenders understand that the reason debtors use their “services” is because they are financially strapped and desperate for cash.  But because their interest rates and fees are astronomically high, most debtors experience “payment shock” and may try to avoid paying them when the bill is due. So to protect their interests in the loan, payday lenders are now using voluntary wage assignments to increase their chances of getting paid.

How Voluntary Wage Assignment  Works

A voluntary wage assignment works just like a wage garnishment , except that the debtor has agreed to it. If a debtor defaults on the payday loan, the lender can then garnish the debtor’s wages without going to court. Once a debtor defaults on their payday loan, the lender will send the debtor a notice informing them that they plan to implement the voluntary wage assignment (i.e. wage garnishment).  This usually happens 20 days before the wage assignment notice is sent to the employer.   A wage assignment is valid for up to 3 years . In other words, the payday lender could technically garnish your wages for 3 years or until the loan is repaid.

For obvious reasons, agreeing to a wage assignment isn’t smart. You give the payday lender access to your wages and make it easier for them when you are not legally required to do so.  Signing a voluntary wage assignment can place you and your family in dire straits, if the lender garnishes wages that you need for your mortgage/rent, food and medical care. If you have signed a voluntary wage garnishment, you can revoke the agreement by sending the lender a letter.  Remember, Payday Loans are Dischargeable in Bankruptcy

Have Any Questions About Bankruptcy?

If you have a question or would like to see if bankruptcy is right for you, feel free to call us or fill out are  contact form  and we would be more than happy to help you.

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WAGE AND HOUR DIVISION

UNITED STATES DEPARTMENT OF LABOR

Fact Sheet #30: The Federal Wage Garnishment Law, Consumer Credit Protection Act's Title III (CCPA)

Revised October 2020

This fact sheet provides general information concerning the CCPA’s limits on the amount that employers may withhold from a person’s earnings in response to a garnishment order, and the CCPA’s protection from termination because of garnishment for any single debt.

Wage Garnishments

A wage garnishment is any legal or equitable procedure through which some portion of a person’s earnings is required to be withheld for the payment of a debt. Most garnishments are made by court order. Other types of legal or equitable procedures for garnishment include IRS or state tax collection agency levies for unpaid taxes and federal agency administrative garnishments for non-tax debts owed to the federal government.

Wage garnishments do not include voluntary wage assignments – that is, situations in which employees voluntarily agree that their employers may turn over some specified amount of their earnings to a creditor or creditors.

Title III of the CCPA’s Limitations on Wage Garnishments

Title III of the CCPA (Title III) limits the amount of an individual’s earnings that may be garnished and protects an employee from being fired if pay is garnished for only one debt. The U.S. Department of Labor’s Wage and Hour Division administers Title III, which applies in all 50 states, the District of Columbia, and all U.S. territories and possessions. Title III protects everyone who receives personal earnings.

The Wage and Hour Division has authority with regard to questions relating to the amount garnished or termination. Other questions relating to garnishment should be directed to the court or agency initiating the garnishment action. For example, questions regarding the priority given to certain garnishments over others are not matters covered by Title III and may be referred to the court or agency initiating the action. The CCPA contains no provisions controlling the priorities of garnishments, which are determined by state or other federal laws. However, in no event may the amount of any individual’s disposable earnings that may be garnished exceed the percentages specified in the CCPA.

Definition of Earnings

The CCPA defines earnings as compensation paid or payable for personal services , including wages, salaries, commissions, bonuses, and periodic payments from a pension or retirement program. Payments from an employment-based disability plan are also earnings.

Earnings may include payments received in lump sums , including:

• commissions;
• discretionary and nondiscretionary bonuses;
• productivity or performance bonuses;
• profit sharing;
• referral and sign-on bonuses;
• moving or relocation incentive payments;
• attendance, safety, and cash service awards;
• retroactive merit increases;
• payment for working during a holiday;
• workers’ compensation payments for wage replacement, whether paid periodically or in a lump sum;
• termination pay ( e.g. , payment of last wages, as well as any outstanding accrued benefits);
• severance pay; and,
• back and front pay payments from insurance settlements.

In determining whether certain lump-sum payments are earnings under the CCPA, the central inquiry is whether the employer paid the amount in question for the employee’s services .If the lump-sum payment is made in exchange for personal services rendered, then like payments received periodically, it will be subject to the CCPA’s garnishment limitations. Conversely, lump-sum payments that are unrelated to personal services rendered are not earnings under the CCPA.

For employees who receive tips, the cash wages paid directly by the employer and the amount of any tip credit claimed by the employer under federal or state law are earnings for the purposes of the wage garnishment law. Tips received in excess of the tip credit amount or in excess of the wages paid directly by the employer (if no tip credit is claimed or allowed) are not earnings for purposes of the CCPA.

Limitations on the Amount of Earnings that may be Garnished (General)

The amount of pay subject to garnishment is based on an employee’s “disposable earnings,” which is the amount of earnings left after legally required deductions are made . Examples of such deductions include federal, state, and local taxes, and the employee’s share of Social Security, Medicare and State Unemployment Insurance tax. It also includes withholdings for employee retirement systems required by law.

Deductions not required by law – such as those for voluntary wage assignments, union dues, health and life insurance, contributions to charitable causes, purchases of savings bonds, retirement plan contributions (except those required by law) and payments to employers for payroll advances or purchases of merchandise – usually may not be subtracted from gross earnings when calculating disposable earnings under the CCPA.

Title III sets the maximum amount that may be garnished in any workweek or pay period, regardless of the number of garnishment orders received by the employer. For ordinary garnishments ( i.e. , those not for support, bankruptcy, or any state or federal tax), the weekly amount may not exceed the lesser of two figures: 25% of the employee’s disposable earnings, or the amount by which an employee’s disposable earnings are greater than 30 times the federal minimum wage (currently $7.25 an hour).

Therefore, if the pay period is weekly and disposable earnings are $217.50 ($7.25 × 30) or less, there can be no garnishment. If disposable earnings are more than $217.50 but less than $290 ($7.25 × 40), the amount above $217.50 can be garnished. If disposable earnings are $290 or more, a maximum of 25% can be garnished. When pay periods cover more than one week, multiples of the weekly restrictions must be used to calculate the maximum amounts that may be garnished. The table and examples at the end of this fact sheet illustrate these amounts.

As discussed below, these limitations do not apply to certain bankruptcy court orders, or to garnishments to recover debts due for state or federal taxes, and different limitations apply to garnishments pursuant to court orders for child support or alimony.

Limitations on the Amount of Earnings That May be Garnished for Child Support and Alimony

Title III also limits the amount of earnings that may be garnished pursuant to court orders for child support or alimony. The garnishment law allows up to 50% of a worker’s disposable earnings to be garnished for these purposes if the worker is supporting another spouse or child, or up to 60% if the worker is not. An additional 5% may be garnished for support payments more than l2 weeks in arrears.

Exceptions to Title III’s Limitation on Wage Garnishments

The wage garnishment law specifies that its limitations on the amount of earnings that may be garnished do not apply to certain bankruptcy court orders, or to debts due for federal or state taxes.

If a state wage garnishment law differs from Title III, the law resulting in the lower amount of earnings being garnished must be observed.

Non-Tax Debts Owed to Federal Agencies

The Debt Collection Improvement Act authorizes federal agencies or collection agencies under contract with them to garnish up to 15% of disposable earnings to repay defaulted debts owed to the U.S. government. As of December 20, 2018, the Higher Education Act authorizes the Department of Education’s guaranty agencies to garnish up to 15% of disposable earnings to repay defaulted federal student loans. Such withholding is also subject to the provisions of Title III of the CCPA, but not state garnishment laws. Unless the total of all garnishments exceeds Title III’s limits on garnishment, questions regarding such garnishments should be referred to the agency initiating the withholding action.

EXAMPLES OF AMOUNTS SUBJECT TO GARNISHMENT

The following examples illustrate the statutory tests for determining the amounts subject to garnishment, based on the current federal minimum wage of $7.25 per hour.

• An employee’s gross earnings in a particular week are $263. After deductions required by law, the disposable earnings are $233.00. In this week, $15.50 may be garnished, because only the amount over $217.50 may be garnished where the disposable earnings are less than $290.
• An employee receives a bonus in a particular workweek of $402. After deductions required by law, the disposable earnings are $368. In this week, 25% of the disposable earnings may be garnished. ($368 × 25% = $92).
• An employee paid every other week has disposable earnings of $500 for the first week and $80 for the second week of the pay period, for a total of $580. In a biweekly pay period, when disposable earnings are at or above $580 for the pay period, 25% may be garnished; $145.00 (25% × $580) may be garnished. It does not matter that the disposable earnings in the second week are less than $217.50.
• An employee on a $400 weekly draw against commissions has disposable earnings each week of $300. Commissions are paid monthly and result in $1,800 in disposable earnings for July after already-paid weekly draws are subtracted and deductions required by law are made. Each draw and the monthly commission payment are separately subject to the law’s limitation. Thus, 25% of each week’s disposable earnings from the draw ($75 in this example) may be garnished. Additionally, 25% of the disposable earnings from the commission payment may be garnished, or $450 ($1,800 × 25% = $450).
• An employee who has disposable earnings of $370 a week has $140 withheld per week pursuant to court orders for child support. Title III allows up to 50% or 60% of disposable earnings to be garnished for this purpose. A garnishment order for the collection of a defaulted consumer debt is also served on the employer. If there were no garnishment orders (with priority) for child support, Title III’s general limitations would apply to the garnishment for the defaulted consumer debt, and a maximum of $92.50 (25% × $370) would be garnished per week. However, the existing garnishment for child support means in this example that no additional garnishment for the defaulted consumer debt may be made because the amount already garnished is more than the amount (25%) that may be generally garnished. Additional amounts could be garnished to collect child support, delinquent federal or state taxes, or certain bankruptcy court ordered payments.

Title III Protections against Discharge when Wages are Garnished

The CCPA prohibits an employer from firing an employee whose earnings are subject to garnishment for any one debt, regardless of the number of levies made or proceedings brought to collect that one debt. The CCPA does not prohibit discharge because an employee’s earnings are separately garnished for two or more debts.

Where to Obtain Additional Information

For additional information, visit our Wage and Hour Division Website: http://www.dol.gov/agencies/whd and/or call our toll-free information and helpline, available 8 a.m. to 5 p.m. in your time zone, 1-866-4USWAGE (1-866-487-9243).

This publication is for general information and is not to be considered in the same light as official statements of position contained in the regulations.

The contents of this document do not have the force and effect of law and are not meant to bind the public in any way. This document is intended only to provide clarity to the public regarding existing requirements under the law or agency policies.

Wage Assignment: Understanding Types and Real-life Scenarios

Last updated 04/16/2024 by

Fact checked by

Understanding wage assignment

How wage assignment operates, voluntary wage assignment, involuntary wage assignment, legal implications and considerations, regulations and protections, pros and cons of wage assignments.

• Facilitates debt repayment
• May prevent further legal actions
• Structured repayment process
• Reduction in take-home pay
• Potential negative impact on credit
• Legal constraints and limitations

Wage assignment in loan repayment

Wage assignment in child support cases, effects of wage assignment on credit, state-specific wage assignment regulations, florida wage assignment regulations, texas wage assignment limitations, frequently asked questions, is wage assignment the same as wage garnishment, can an employer refuse a wage assignment request from an employee, what legal protections exist for employees regarding wage assignments, can wage assignments be stopped or modified once initiated, do all types of debts qualify for wage assignment, key takeaways.

• Wage assignment involves deducting money from an employee’s paycheck to repay debts.
• It can be voluntary or involuntary, with distinct legal implications.
• State laws govern wage assignments, setting limits on garnishments and durations.
• Employees and employers should understand their rights and obligations regarding wage assignments.

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