Employees should know how creditors can legally collect from them. Here is how you may be exempt from California “wage garnishment” laws.
What is wage garnishment?
Wage garnishments, also known as wage attachments, set aside and give a predetermined amount of your paycheck to creditors (people to whom you owe money, like a credit card company or other lenders). Certain types of creditors must file suit and get approved by a judge to garnish wages. Other creditors, like those you owe taxes, don’t have to go through courts beforehand. Unless you intervene, creditors can continue garnishing your wages until all debts have been paid.
A creditor’s legal right to garnish wages may be limited. Federal law bars creditors from garnishing over 25% of your disposable paycheck earnings (or, earnings exceeding 30 times the federal minimum hourly wage, whichever is less). Depending on your state, financial situation, or type of creditor, claiming an exemption can either reduce or entirely prevent wage garnishment.
Related: Wage Discrimination Laws in California
How is wage garnishment different in California?
In California, creditors can garnish a portion of your paycheck no larger than:
- 25% of your disposable weekly earnings, or
- 50% of the amount of your weekly disposable earnings exceeding 40 times California’s minimum wage.
Disposable earnings (left in a paycheck after an employer deducts for services like Social Security) should not be confused with discretionary income.
The amount a creditor can garnish may change depending on owed child support, federal student loans, or unpaid taxes. Federal and state creditors do not need to file a claim in court before issuing a garnishment order and can garnish more wages than California limits.
Related: A Guide to Equal Pay Laws in California
How to Protect Paychecks from Garnishment
Depending on the type of creditor you owe, filing an exemption claim or raising an objection may prevent some or all of a paycheck from being garnished.
Additionally, filing for bankruptcy may be an exemption for most garnishments, and courts may determine the amount of garnishment exempt.
Ineligibility for exemption should not interfere with the ability to work because employers are prevented by federal law from firing employees due to a wage garnishment issue.
Wage garnishment can be a hassle for parties involved, especially an employee with outstanding debts. California’s high minimum wage and cost of living limit how creditors can go about garnishing paychecks.
Employees are also federally protected from termination due to a wage garnishment issue. California employees should understand how much can be deducted from paychecks and eligibility for an exemption to save more or all disposable earnings. Understanding some types of creditors are not bound by state limits can prevent any surprises when looking at a paycheck.
Related: California Labor Code: 226: Elements of a Wage Statement
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If you or a loved one would like to know more information on California wage garnishment laws, get your free consultation with one of our employment lawyers today!