CPM Wage Garnishment Compliance 2 — 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 ordinary consumer debts?
- 10%
- 15%
- 25% (Correct answer)
- 35%
Correct answer: 25%
The CCPA limits garnishment for ordinary consumer debts to 25% of disposable earnings or the amount by which disposable earnings exceed 30 times the federal minimum wage, whichever is less.
Question 2: An employee has a child support order for $400/week and a creditor garnishment for $150/week. Disposable earnings are $900/week. Which garnishment takes priority?
- Creditor garnishment, as it was received first
- Child support order, regardless of when received (Correct answer)
- Both are paid proportionally
- Neither can be withheld simultaneously
Correct answer: Child support order, regardless of when received
Child support and alimony orders have priority over all other garnishments under federal law.
Question 3: What is the federal minimum wage threshold used to calculate the protected earnings floor for garnishment purposes?
- 20 times the federal minimum hourly wage
- 25 times the federal minimum hourly wage
- 30 times the federal minimum hourly wage (Correct answer)
- 40 times the federal minimum hourly wage
Correct answer: 30 times the federal minimum hourly wage
Federal law protects disposable earnings up to 30 times the federal minimum wage ($7.25/hr = $217.50/week) from garnishment.
Question 4: A payroll manager receives a creditor garnishment for an employee who is already subject to a child support withholding order consuming 55% of disposable earnings. What should the payroll manager do?
- Withhold both orders in full
- Honor only the creditor garnishment
- Honor only the child support order; no room remains for the creditor garnishment (Correct answer)
- Split the remaining disposable earnings equally
Correct answer: Honor only the child support order; no room remains for the creditor garnishment
Because the child support order already reaches the CCPA maximum for support orders, no disposable earnings remain available for the creditor garnishment.
Question 5: Which federal agency enforces the CCPA's wage garnishment provisions for private-sector employees?
- IRS
- Department of Education
- Wage and Hour Division of the DOL (Correct answer)
- Consumer Financial Protection Bureau
Correct answer: Wage and Hour Division of the DOL
The Wage and Hour Division (WHD) of the U.S. Department of Labor enforces the CCPA's wage garnishment restrictions.
Question 6: When does the CCPA's anti-retaliation protection for garnished employees expire?
- It expires after the first garnishment is satisfied
- It only applies to the first garnishment ever received (Correct answer)
- It applies indefinitely to any garnishment in effect
- It applies only during the first 90 days of employment
Correct answer: It only applies to the first garnishment ever received
The CCPA prohibits discharge of an employee for having earnings subject to garnishment for any ONE indebtedness; it does not protect employees with two or more garnishments.
Question 7: A state law allows garnishment of up to 10% of disposable earnings, while federal law allows 25%. Which rule applies?
- Federal law always controls
- State law applies because it is more protective of the employee (Correct answer)
- The employer may choose either rule
- The creditor selects which law applies
Correct answer: State law applies because it is more protective of the employee
When state law provides greater protection to the employee (lower garnishment limit), the state law prevails over federal law.
CPM Wage Garnishment Compliance 2
Under the Consumer Credit Protection Act (CCPA), what is the maximum percentage of disposable earnings that can be garnished for ordinary consumer debts?