Garnishments and Deductions Flashcards

Under the Consumer Credit Protection Act (CCPA), what is the maximum percentage of disposable earnings that can be garnished for a standard creditor garnishment when the employee supports another spouse or child?

Answer: 25%

The CCPA limits standard creditor garnishments to 25% of disposable earnings (or the amount by which disposable earnings exceed 30 times the federal minimum wage, whichever is less).

When an employee has both a child support withholding order and a creditor garnishment, which obligation takes priority?

Answer: Child support withholding order

Child support withholding orders have priority over all other garnishments, including creditor garnishments, by federal law.

Which of the following best defines 'disposable earnings' for garnishment purposes?

Answer: Earnings remaining after legally required deductions

Disposable earnings are the amount remaining after legally required deductions such as taxes, Social Security, and Medicare are withheld — not voluntary deductions like 401(k).

An employer in ADP receives a federal tax levy (Form 668-W) for an employee. What amount is exempt from the levy?

Answer: The amount determined by Part 3 of Form 668-W based on filing status and dependents

The exempt amount from a federal tax levy is determined by Part 3 of IRS Form 668-W, which considers the employee's filing status and number of dependents.

What is the maximum percentage of disposable earnings that can be withheld for child support when an employee is NOT supporting another spouse or child and is 12 or more weeks in arrears?

Answer: 65%

When an employee is not supporting another family and is 12 or more weeks in arrears, the CCPA allows up to 65% of disposable earnings to be withheld for child support.

Under the CCPA, how much of an employee's weekly disposable earnings are protected from garnishment if the federal minimum wage is $7.25 per hour?

Answer: $217.50

The CCPA protects 30 times the federal minimum wage ($7.25 × 30 = $217.50) in disposable earnings from garnishment each week.

What should a payroll specialist do in ADP when they receive a garnishment order for an employee who has already terminated employment?

Answer: Forward the order to the issuing agency and notify them of the termination

When a garnishment order is received for a terminated employee, the employer must notify the issuing agency of the termination and return or forward the order as instructed.