Can an Employer Discharge an Employee Due to Garnishment?

Title III of the Consumer Credit Protection Act is a federal law that sets forth minimum protections for consumers who have their wages garnished, and bars employers from discharging an employee because of wage garnishment. Most states have separate state laws that govern the process and procedures for wage garnishment. Many states simply follow the protections set forth in the CCPA. Some states provide stronger protections for consumers that go farther than the CCPA. No matter what state, the CCPA sets out the minimum protections afforded to employees who have their wages garnished.

  1. Garnishment

    • Garnishment is typically a judicial procedure in which a creditor moves a court to order a debtor’s employer to withhold portions of the debtor’s paycheck and pay that portion to the creditor. Typically, the creditor must first sue the debtor in court, and then move for a writ of garnishment. The employer is referred to as the garnishee.


    • Title III applies to all employers and employees who perform personal services and receive wages for those services. However, it does not necessarily cover individuals who earn tips. Some states extend comparable protections to the CCPA to those whose primary income is from tips. The Wage and Hour Division of the Department of Labor administers the CCPA.


    • Title III provides limitations to the percentage of a person’s wages that a creditor can garnish. The law exempts 75 percent of the debtor’s wages or 30 times the minimum wage, whichever is more. So, for example, a person earning $3,000 per month would have $2,250 of that exempt from garnishment (or 75 percent of $3,000). Title III also bars employers from discharging an employee solely because the employee had her wages garnished.


    • Employees who believe their employers violated the CCPA can file a complaint with the Wage and Hour Division of the Department of Labor. The Wage and Hour Division may impose a variety of sanctions when it finds a violation occurred. Possible sanctions include an order to reinstate the discharged employee. In addition, employers who violate the law could subject themselves to up to a $1,000 criminal penalty, imprisonment for up to one year or both.

    State Laws

    • Where state law is different than Title III of the CCPA, the employer must follow whichever law is stricter. That means if the state exempts more than 75 percent of a debtor’s income (for example, 90 percent) the employer must follow that law. Whether state law speaks to it or not, an employer cannot discharge an employee solely for wage garnishment.


    • Please contact a qualified attorney to find out how the facts of your situation apply to state and federal wage garnishment laws. This article is not intended to give legal advice.

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