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Administrative Wage Garnishment - A Guide For Employers
A. Frequently Asked Questions Concerning the Garnishment Amount.
1. Why do I have to change the garnishment withholding from 10% to 15% of my employee's wages?
The Department of Education is now issuing withholding orders for up to 15% of the disposal pay of individuals who owe a debt to Education. This withholding is authorized by the Debt Collection Improvement Act of 1996, at 31 U.S.C. 3720D. The Department has issued orders pursuant to authority of section 488A of the Higher Education Act, 20 U.S.C. 1095a, and many such orders remain outstanding and effective.
2. If someone else already is garnishing my employee's disposable pay, do I still have to comply with the Administrative Wage Garnishment (AWG) Order?
Whether you must currently withhold to honor Education's order depends on the amount now being withheld from the employee's pay to meet other garnishment orders. Federal law (15 USC ยง1673) imposes a maximum on how much can be withheld from an employee's pay for garnishment orders; except where the order in question is a family support order, no more than25% of the employee's disposable pay, or the amount the exceeds 30 times the minimum wage, whichever is smaller. If, for example, that employee is currently being garnished for student loan debts under two separate orders for 10% withholding, Education's newly-received order must be honored to the extent of the remaining 5% of the employee's disposable pay. On the other hand, if the prior garnishment(s) account for 25%, then nothing would have to be withheld under the AWG Order, at least until the prior garnishment(s) was satisfied or expired. Remember: That same Federal law also protects from garnishment a "floor" level of income equal to 30 times the Federal minimum wage per week. Some garnishments expire; AWG withholding orders issued under the authority of section 488A Higher Education Act, 20 U.S.C. 1095a, or 31 U.S.C. 3720D do not expire.
3. How do I use the Wage Garnishment Worksheet to calculate my employee's wages?
The Wage Garnishment Worksheet (Standard Form 329C) is enclosed with the Wage Garnishment Order (Standard Form 329B) to assist you in determining the proper amount to withhold. You may use a copy of the Worksheet each pay period to calculate the Wage Garnishment Amount to be deducted from the debtor's disposable pay. You may also use the U.S. Department of Treasury Financial Management Service's calculator to assist in your calculations at
http://fms.treas.gov/debt/awg....
4. If an employer is withholding from a debtor's pay based on a garnishment order served on the employer before our order, or if a withholding order for family support is served on an employer at any time, the employer must comply with our garnishment order by withholding an amount this is the smaller of an amount equal to 25% of the debtor's disposable pay less the amount or amounts withheld under the garnishment order or orders with priority over our order. See the examples below:
Examples A&B
Note 1: As explained on the Order and worksheet, the total amount of an employee's wages subject to garnishment of any kind is the lesser of 25% of the employee's disposable pay or the amount exceeding 30 times the minimum wage ($5.15 / hour).
Note 2: Federal law sets a higher limit on disposable pay subject to garnishment for a child support order. 15 U.S.C. 1673(b)(2).
Examples A & B are based on an employee earning enough to make 25% of disposable pay the only limit applicable to handling the specific garnishment orders in the examples.
Employer should pay CRS first 20% of the employee's disposable pay, and the remaining 5% of wages available for withholding to USAF. This exhausts the 25% available for withholding (15 U.S.C. 1673(a)(2)). The employer cannot honor any part of the ED order until either of the prior orders are satisfied or cancelled.
SHC's order is first in time, thus the Employer should pay SHC the full 25% of disposable pay authorized by 15 U.S.C. 1672(a) until the SHC order expires or the debt is paid in full. The Employer should then pay ED 15%, and FMC the remaining 10% of disposable pay subject to withholding
5. May I send the garnishment payments electronically?
No. Not at this time.
6. Why isn't this student debt or garnishment shown on my employee's credit bureau report?
Federal law generally bars credit bureaus from reporting negative information on education loan debts more than seven years after the event being reported; on many education loans, default - and, if a guaranteed loan, payment on that guarantee - has occurred more than seven years ago. Credit reports generally do not include specific information on action taken by a creditor to collect a debt, other than entry of judgment. Administrative Wage Garnishments do not depend on a judgment, neither the issuance of a garnishment order nor other collection actions are reported by the Department to credit bureaus, or included in reports issued by the bureaus.
7. Does ED garnishment order take priority over all other garnishment orders?
No. Federal regulations governing administrative wage garnishment orders require the employer to honor an ED wage garnishment order before any wage withholding order received by the employer after the ED order other than a family support order. If a specific Federal law requires a different priority, that Federal law controls. ED's wage garnishment order remains effective until cancelled, and need not be reissued to remain in effect.
If an employer is withholding from a debtor's pay based on a garnishment order served on the employer before our order, or if a withholding order for family support is served on an employer at any time, the employer must comply with our garnishment order by withholding an amount this is the smaller of an amount equal to 25% of the debtor's disposable pay less the amount or amounts withheld under the garnishment order or orders with priority over our order. See the examples below:
Examples A&B
Note 1: As explained on the Order and worksheet, the total amount of an employee's wages subject to garnishment of any kind is the lesser of 25% of the employee's disposable pay or the amount exceeding 30 times the minimum wage ($5.15 / hour).
Note 2: Federal law sets a higher limit on disposable pay subject to garnishment for a child support order. 15 U.S.C. 1673(b)(2).
Examples A & B are based on an employee earning enough to make 25% of disposable pay the only limit applicable to handling the specific garnishment orders in the examples.
Employer should pay CRS first 20% of the employee's disposable pay, and the remaining 5% of wages available for withholding to USAF. This exhausts the 25% available for withholding (15 U.S.C. 1673(a)(2)). The employer cannot honor any part of the ED order until either of the prior orders are satisfied or cancelled.
SHC's order is first in time, thus the Employer should pay SHC the full 25% of disposable pay authorized by 15 U.S.C. 1672(a) until the SHC order expires or the debt is paid in full. The Employer should then pay ED 15%, and FMC the remaining 10% of disposable pay subject to withholding
To read this informational its entirely, just click on this link
http://www.ed.gov/offices/OSFA...
