Do your supervisors know what weekly disposable earnings means in the context of wage garnishment? Do they know the maximum amount that may be withheld for debt? Below is some information to convey to your supervisors.
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- "Disposable earnings" is the amount left of an employee's weekly paycheck after legally required deductions have been made. These deductions include federal, state, and local taxes; Social Security and Medicare; unemployment insurance; and state employee retirement systems.
- Other deductions that are not required by law are not subtracted from gross weekly earnings when calculating the amount of disposable earnings for garnishment or family support purposes. Such deductions might include health and life insurance, 401(k) contributions, and union dues.
The maximum amount of disposable earnings that can be withheld from an employee's wages to satisfy a debt is set by law. Since it's very important not to withhold more than the law allows, you should be familiar with the legal maximums.
The maximum withholding for consumer debt garnishment is the lesser of two possible calculations:
- The first calculation is simply a maximum of 25 percent of an employee's weekly disposable earnings.
- The second calculation is more complicated. It is the amount by which an employee's weekly disposable earnings exceed 30 times the federal minimum hourly wage. For example, say the federal minimum wage is $6 and an employee's weekly gross earnings for working 40 hours are $240. After legally required deductions, say the employee is left with $200 in disposable earnings. The maximum withholding for a consumer debt would be $20 a week. That's $200 minus $180, which is 30 times $6. That's less than 25 percent of $200, which is $50. This means the maximum withholding for consumer debt garnishment for this employee would be $20 a week.
The above information comes from BLR's presentation "Wage Garnishment and Family Support Withholding: What Supervisors Need to Know." For more information on all the training courses BLR has to offer, go to our Employee and Manager Training page.