There are many reasons an employee might have their wages garnished. There are also many corresponding pitfalls for employers in successfully navigating a wage garnishment and responding to a summons of garnishment. This is understandable when you consider the overlapping federal and state laws that apply to employee wage garnishments. For employers, improperly responding to a garnishment can result in a default judgment requiring them to pay the court the total garnishment amount.
The Consumer Credit Protection Act (CCPA) addresses some of the rules for employers when garnishing an employee’s wages, including limits on retaliatory actions and on the amount of an employee’s wages that can be garnished. One important employee protection provided by the CCPA is that an employer cannot discharge an employee because the employee’s earnings are subject to garnishment for any one indebtedness. Willful violations can result in fines up to $1,000 or imprisonment for up to one year, or both. Also of note, the CCPA does not pre-empt more restrictive state garnishment laws.
Georgia’s laws addressing garnishment were recently updated on January 1, 2021. In Georgia, employers are required to withhold employee wages beginning on the date the employer receives a service of the summons of garnishment. Thus, an employer must begin withholding wages from the date they are properly served, even if it then takes a few extra days (or weeks) to reach the person or service provider that is ultimately responsible for processing the wage garnishment. An employer may, however, be able to avoid liability for failing to withhold wages if there was some defect in the service process. Otherwise, in addition to appropriately withholding wages, the employer must file an answer with the court within 45 days, and possibly every 45 days thereafter. One recent update to the law increased the length of time for a continuing garnishment from a limit of six months to a limit of three years. Similar to federal law, Georgia law does not allow an employer to terminate an employee on the grounds the employee is subject to garnishment for any one obligation.
What Wages Can Be Garnished?
Generally speaking, employers cannot withhold more than 25% of an employee’s weekly disposable earnings (gross wages minus certain legally required deductions). The actual calculation can seem complicated, but essentially, employers must garnish the lesser of (1) 25% of the employee’s disposable earnings for the week or (2) the amount by which the employee’s weekly disposable earnings exceed 30 times the federal minimum hourly wage at the time the earnings are payable. If that just gave you an instant headache, you are not alone. To further complicate things, this amount can be lower or higher depending on the type of garnishment (for example, child support or certain student loans). If the employee is not paid on a weekly basis, employers will need to calculate the appropriate equivalents of the withholding amount restrictions for each pay period.
Filing an Improper Response or Failing to Respond
An employer who fails to respond, or who does not properly respond, to the summons of garnishment, can be held in default. Employers held in default may be liable for paying the full amount of the employee’s garnishment directly to the court. With Georgia recently allowing up to three years for a continuing garnishment, more creditors may begin filing garnishments for larger amounts, thereby also increasing the potential liability for employers who do not properly respond. It is not all doom and gloom though. Georgia allows for some recovery of administrative costs (e.g., attorney’s fees) associated with filing the proper forms with the court.
If you have any questions regarding this or any other legal matter, please do not hesitate to contact our experienced Atlanta employment attorneys.