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Wage Garnishment Orders: Employer Compliance Guide
The CCPA caps an ordinary wage garnishment at the lesser of 25 percent of disposable earnings or the amount by which weekly pay exceeds 30 times the federal minimum wage, $217.50. Child support orders can take up to 60 percent. BEG calculates the withholding each pay period at $45 per employee monthly.
Two employees, two very different garnishment caps
The Consumer Credit Protection Act, enforced by DOL's Wage and Hour Division, caps an ordinary garnishment at whichever is lower: 25 percent of disposable earnings, or the amount by which weekly disposable earnings exceed 30 times the federal minimum wage. At the current $7.25 rate, that floor is $217.50 a week. Run the math on two employees and the gap is significant.
| Weekly disposable earnings | 25% test | Earnings-over-$217.50 test | Amount actually garnishable |
|---|---|---|---|
| $900 | $225.00 | $682.50 | $225.00 (the lesser amount) |
| $250 | $62.50 | $32.50 | $32.50 (the lesser amount) |
At $900 a week, the 25 percent test produces the smaller number. At $250 a week, the wage-floor test does. The rule always takes the outcome that leaves the employee with more money, which is exactly why a flat 25 percent assumption is wrong for lower-paid workers.
What actually counts as disposable earnings
Disposable earnings means pay left after legally required deductions only: federal, state, and local income tax, plus the employee's share of Social Security, Medicare, and state unemployment tax. Voluntary deductions, health insurance premiums, union dues, 401(k) contributions, cannot be subtracted before the disposable-earnings figure is calculated. An employer that nets those out first is applying the CCPA cap to the wrong number.
Where the cap goes higher: support orders and federal debts
Child support and alimony orders are not held to the 25 percent ceiling. They can take up to 50 percent of disposable earnings if the employee supports another spouse or child, up to 60 percent if not, and an additional 5 percent on top of either figure when the support is more than 12 weeks in arrears. Tax levies and certain bankruptcy orders sit outside the CCPA caps altogether. On the other end, federal agency administrative garnishments and defaulted federal student loans are capped lower, at 15 percent of disposable earnings.
The CCPA does not rank competing orders against each other. When two garnishments land on the same employee, priority between them is a matter of state or other federal law, not the CCPA itself. And where a state garnishment law would produce a lower withholding than the federal cap, the lower state number governs.
What employers get wrong
Two mistakes recur. The first is treating bonuses, commissions, severance, and other lump sums as somehow separate from regular wages: they are earnings for CCPA purposes and are independently subject to the same cap. The second is assuming a garnishment order is grounds for termination. It is not. Federal law bars firing an employee over garnishment for any single debt, no matter how many separate proceedings that debt generates.
What BEG runs on every pay period
BEG sets up the order inside the client's payroll system, calculates the withholding against disposable earnings each pay period under the CCPA cap, any tighter state cap, and the correct treatment of bonuses and lump sums, and remits the withheld amount to the issuing agency or creditor. Answering the order, contesting it, and resolving priority between competing orders stay with the client and its counsel; BEG executes the calculation the order requires.
Full BEG managed payroll runs garnishment calculations and remittance as a standard part of the service.
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Frequently Asked Questions
How much of an employee paycheck can an ordinary garnishment take?
The CCPA caps it at whichever is lower: 25 percent of disposable earnings, or the amount by which weekly disposable earnings exceed 30 times the federal minimum wage, which is $217.50 a week at the current $7.25 rate. Whichever number is smaller controls.
What counts as disposable earnings for a garnishment calculation?
Pay left after legally required deductions only: federal, state, and local taxes, plus the employee share of Social Security and Medicare and state unemployment tax. Voluntary deductions such as health insurance, union dues, and 401(k) contributions cannot be subtracted before the cap is applied.
How much can be garnished for child support or alimony?
Up to 50 percent of disposable earnings if the employee supports another spouse or child, up to 60 percent if not, plus an extra 5 percent if the support is more than 12 weeks in arrears. Tax levies and certain bankruptcy orders sit outside the CCPA caps entirely.
Are bonuses and commissions subject to garnishment?
Yes. Bonuses, commissions, severance, and other lump sums paid for personal services count as earnings and are separately subject to the same CCPA cap as regular wages.
Can an employer fire an employee over a garnishment order?
Not for a single debt. Federal law prohibits termination based on garnishment for any one indebtedness, regardless of how many separate garnishment proceedings that single debt requires.
What happens when two garnishment orders arrive for the same employee?
The CCPA sets the overall withholding ceiling but does not rank competing orders against each other; priority between them is left to state or other federal law. A state law that produces a lower withholding than the CCPA governs instead of the federal cap.
Are federal student loan garnishments capped the same way?
No. Federal agency administrative garnishments and defaulted federal student loans are capped separately at 15 percent of disposable earnings, lower than the 25 percent ordinary garnishment ceiling.
What does BEG handle when a garnishment order arrives?
BEG sets up the order inside the client's payroll system, calculates the withholding against disposable earnings every pay period under the CCPA and any applicable state cap, and remits to the issuing agency or creditor, all inside standard managed payroll at $45 per employee monthly.
What does BEG managed payroll cost?
$45 per employee per month, all-inclusive, inside the payroll software you already use, or on BEG's isolved HCM at the same rate.
Related Resources
Anthony leads payroll solutions at Business Executive Group, a national managed payroll firm serving businesses across industries. BEG manages payroll at $45 PEPM, all-inclusive, with deep expertise in compliance, multi-state filing, and industry-specific payroll requirements. Get instant pricing at beghr.com.
Source: U.S. Department of Labor, Wage and Hour Division Fact Sheet #30: The Consumer Credit Protection Act. This is general compliance information, not legal advice.
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