How to Calculate a Wage Garnishment
Federal law limits the amount that can be withheld for a creditor garnishment to the lesser of 25 percent of "disposable pay," or the amount by which disposable pay exceeds 30 times minimum wage. Disposable pay is defined as the employee's pay after taking all legally required deductions. Since creditor wage garnishments have a lower priority than other garnishments, a wage garnishment can only be withheld if there is enough money left in the employee's disposable pay after taking child support and tax levies.
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Things You'll Need
- wage garnishment order
- current federal minimum wage figure
- employee payroll records
Instructions
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1
Subtract taxes from the employee's gross wages. Do not subtract any voluntary deductions. The amount you are left with is called "disposable pay."
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2
Multiply disposable pay by 25 percent.
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3
Multiply 30 times the federal minimum wage. This gives you a weekly figure. If your pay period is weekly, continue to the next step. If your pay period is not weekly, you will need to adjust this figure by multiplying it by 52 weeks and then dividing the result by the number of pay periods you have each year. For example, if you pay semi-monthly, you have 24 pay periods per year. If the current minimum wage is $7.25, your calculation would be: 30 x $7.25 = $217.50. To adjust for your semi-monthly pay period, your calculation would be $217.50 x 52/24 = $471.25.
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4
Subtract your result for Step 3 from disposable pay.
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5
Compare your results from Steps 2 and 4. Subtract from the lesser of these two amounts all existing deductions for child support and federal, state or local tax levies. The remainder is the amount available for all creditor garnishments. If your result is zero or less, then there are no monies available for creditor garnishments.
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Tips & Warnings
The withholding order will provide you with the information you need to remit the garnished funds.
If you determine there are no funds available for the creditor garnishment, read the withholding order for instructions on how to notify the court.
Carefully follow the instructions on the withholding order you receive.
State laws may vary from federal law, so be sure to check the laws for both the state you work in and the state the employee lives in.
If state law varies from federal law, follow the law that provides the greater exemption of wages from garnishment.
