Fundamental Payroll Certification Fundamental Payroll Involuntary and Voluntary Deductions 2 — Questions and Answers
Question 1: Under the CCPA, what is the maximum garnishment percentage of disposable earnings for child support when the employee IS supporting another spouse or dependent and is NOT in arrears?
- 50% (Correct answer)
- 55%
- 60%
- 65%
Correct answer: 50%
CCPA allows up to 50% of disposable earnings for child support when the employee supports a current spouse or dependent and is not more than 12 weeks in arrears.
Question 2: Which federal law establishes limits on the amount of employee wages that can be garnished and prohibits termination due to a single garnishment?
- Fair Labor Standards Act (FLSA)
- Consumer Credit Protection Act (CCPA) (Correct answer)
- Employee Retirement Income Security Act (ERISA)
- Uniform Commercial Code (UCC)
Correct answer: Consumer Credit Protection Act (CCPA)
Title III of the CCPA limits wage garnishment amounts and protects employees from discharge solely because their wages are garnished for one debt.
Question 3: Which of the following correctly defines 'disposable earnings' for garnishment calculation purposes?
- Gross wages minus all payroll deductions including voluntary ones
- Net take-home pay after all deductions
- Gross earnings minus legally required deductions (Correct answer)
- Total compensation including employer-paid benefits
Correct answer: Gross earnings minus legally required deductions
Disposable earnings equal gross wages minus only legally required deductions such as federal, state, and local income taxes and mandatory retirement contributions.
Question 4: For creditor garnishments, CCPA protects a weekly floor equal to how many times the federal minimum wage?
- 20 times
- 30 times (Correct answer)
- 40 times
- 50 times
Correct answer: 30 times
Employees must retain at least 30 times the federal hourly minimum wage per week, forming an income floor that cannot be touched by creditor garnishments.
Question 5: An employee's disposable earnings are $500 per week. The federal minimum wage is $7.25/hour. What is the maximum creditor garnishment amount?
- $282.50
- $125.00 (Correct answer)
- $217.50
- $100.00
Correct answer: $125.00
The lesser of 25% of $500 ($125) or the amount above 30x $7.25 ($500 - $217.50 = $282.50) is $125, which is the maximum garnishable amount.
Question 6: When an employer has multiple garnishment orders for the same employee, which type generally holds the highest priority?
- Creditor garnishments for consumer debt
- Federal student loan garnishments
- Child support and alimony orders (Correct answer)
- State income tax levies
Correct answer: Child support and alimony orders
Child support and alimony orders (Title IV-D orders) are granted priority over other garnishment types under federal law to protect dependent family members.
Question 7: Which of the following is correctly classified as an involuntary deduction?
- 403(b) retirement contribution
- Health Savings Account (HSA) contribution
- Court-ordered creditor wage garnishment (Correct answer)
- Dependent care FSA election
Correct answer: Court-ordered creditor wage garnishment
A creditor wage garnishment is an involuntary deduction because it is mandated by a court order and the employee has no choice in the matter.
Fundamental Payroll Certification Fundamental Payroll Involuntary and Voluntary Deductions 2
Under the CCPA, what is the maximum garnishment percentage of disposable earnings for child support when the employee IS supporting another spouse or dependent and is NOT in arrears?