CPS Garnishments & Levies

Question 1

Which federal law governs the maximum amount that can be withheld from an employee's wages for a creditor garnishment?

Accepted Answer

Consumer Credit Protection Act (CCPA)

Answer

Fair Labor Standards Act (FLSA)

Answer

Employee Retirement Income Security Act (ERISA)

Answer

Fair Debt Collection Practices Act (FDCPA)

Question 2

Under the CCPA, the maximum garnishable amount for ordinary consumer debt is the lesser of two figures. What are they?

Accepted Answer

25% of disposable earnings OR the amount by which disposable earnings exceed 30 times the federal minimum hourly wage

Answer

10% of gross earnings OR earnings exceeding 25 times federal minimum wage

Answer

20% of net pay OR earnings exceeding 40 times state minimum wage

Answer

15% of gross earnings OR earnings exceeding 20 times the federal minimum wage

Question 3

How are 'disposable earnings' defined for federal wage garnishment purposes?

Accepted Answer

Earnings remaining after legally required deductions such as taxes and Social Security

Answer

Gross wages before any deductions are taken

Answer

Net take-home pay after all employer and voluntary deductions

Answer

Total compensation including tips, bonuses, and commissions only

Question 4

Which type of garnishment order generally takes priority over all other garnishments when received simultaneously?

Accepted Answer

Child support and alimony income withholding orders

Answer

Federal student loan administrative wage garnishments

Answer

Creditor garnishments from court judgments

Answer

State tax levies

Question 5

What is an IRS wage levy?

Accepted Answer

The IRS's legal seizure of wages to satisfy an unpaid federal tax debt

Answer

A court-ordered voluntary payment plan negotiated with the IRS

Answer

A penalty assessed for late payroll tax deposits

Answer

A lien placed on an employee's future property only

Question 6

Under federal law, an employer is prohibited from discharging an employee whose wages are garnished for:

Accepted Answer

A single debt, but not for multiple simultaneous garnishments

Answer

Any garnishment, regardless of the number or type

Answer

Only child support garnishments

Answer

Only IRS tax levies

Question 7

Upon receiving a valid garnishment order, what is the employer's initial required action?

Accepted Answer

Notify the employee and begin withholding as directed by the order

Answer

Contact the creditor to dispute the order before withholding anything

Answer

Return the order to the court for verification

Answer

Withhold funds but wait 30 days before remitting to allow the employee to object