ADP Garnishments and Deductions 1 — Questions and Answers
Question 1: 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?
- 25% (Correct answer)
- 50%
- 60%
- 65%
Correct 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).
Question 2: When an employee has both a child support withholding order and a creditor garnishment, which obligation takes priority?
- Creditor garnishment
- Child support withholding order (Correct answer)
- Federal tax levy
- Student loan garnishment
Correct answer: Child support withholding order
Child support withholding orders have priority over all other garnishments, including creditor garnishments, by federal law.
Question 3: Which of the following best defines 'disposable earnings' for garnishment purposes?
- Gross wages before any deductions
- Earnings remaining after all mandatory and voluntary deductions
- Earnings remaining after legally required deductions (Correct answer)
- Net pay after taxes and benefits deductions
Correct 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).
Question 4: An employer in ADP receives a federal tax levy (Form 668-W) for an employee. What amount is exempt from the levy?
- The amount determined by Part 3 of Form 668-W based on filing status and dependents (Correct answer)
- 25% of disposable earnings
- A flat $500 per pay period
- The total amount of mandatory deductions
Correct 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.
Question 5: 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?
- 50%
- 55%
- 60%
- 65% (Correct answer)
Correct 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.
Question 6: 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?
- $145.00
- $181.25
- $217.50 (Correct answer)
- $290.00
Correct answer: $217.50
The CCPA protects 30 times the federal minimum wage ($7.25 × 30 = $217.50) in disposable earnings from garnishment each week.
Question 7: What should a payroll specialist do in ADP when they receive a garnishment order for an employee who has already terminated employment?
- Process the garnishment against the final paycheck if not yet issued
- Ignore the order since the employee is no longer active
- Forward the order to the issuing agency and notify them of the termination (Correct answer)
- Hold the order for 30 days in case the employee is rehired
Correct 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.
ADP Garnishments and Deductions 1
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?