Wage Garnishment

By using the procedures of the Wage Garnishment Law (hereafter "WGL"), a judgment creditor may compel an individual judgment debtor's employer to withhold the nonexempt portion of the debtor's disposable earnings for payment directly to the levying officer, to be applied to satisfy the judgment. Wage garnishment may be the only means available to enforce a judgment where other property of the debtor is exempt. So long as the judgment creditor knows the name and address of the judgment debtor's employer, it is relatively easy and inexpensive to garnish a debtor's wages. (However, a court order is required to garnish the wages of a nondebtor spouse.)

Service of an effective earnings withholding order creates a lien on the employee's earnings and generally on all property of the employer. However, this lien is limited to the amount required to be withheld.

Thoug the garnishment process is relatively simple, the downside for the creditor is that, at least 75% of a debtor's earnings are automatically exempt from garnishment, except as to judgments for support. Thus, unless the debtor earns a large salary, the creditor will receive relatively little from a wage garnishment. It could take years to satisfy a judgment by garnishing the debtor's wages and if the debtor quits or is fired, there will be no wages to garnish. Furthermore, a wage garnishment might prompt the debtor to file a bankruptcy petition. If the debtor receives a discharge in bankruptcy, the wage garnishment will not attach to the debtor's postpetition wages.

General Concepts:

The Wage Garnishment Law is the exclusive judicial method of compelling an employer to withhold an employee's earnings to satisfy a nonsupport judgment. [Ca Civ Pro - 706.020] Federal law permits the garnishment of federal employees' salaries for any purpose (see also Comment to Ca Civ Pro - 706.020--"The Wage Garnishment Law has no effect on matters that are preempted by federal law").)

But Note: A judgment debtor's earnings may be withheld to satisfy a support judgment pursuant to an earnings assignment order for support (Ca Fam - 5200 et seq.). Earnings assignment orders have priority over any type of earnings withholding order (Ca Civ Pro - 706.031), are a remedy exclusive to court-ordered support obligations, and are not governed by the WGL. [See Ca Civ Pro -- 706.020, 706.031; and Ca Fam - 5200 et seq. (governing earnings assignment orders for support)]

For purposes of the WGL, an "employee" is any individual who performs services subject to the right of the employer (the person for whom the services are performed) to control both what is done and how it is done. [Ca Civ Pro - 706.011(b),(c)] It follows that the WGL does not apply to self-employed debtors.

Incorporated Professionals: However, persons who form professional corporations (e.g., doctors, dentists, lawyers) are not self-employed--i.e., they are employed by their corporations. Thus, an incorporated professional's wages may be garnished. Other sums due the debtor from his or her corporation may be reached by a garnishment levy (writ of execution). Future payments (e.g., corporate dividends) may also be reached by an assignment order.

State Employees: The earnings of a state or local employee or public officer may be withheld under the WGL. [See Comment to Ca Civ Pro - 706.020; Ca Civ Pro - 708.720(b)]

Federal Employees: Federal law permits the salaries of federal employees to be garnished for any purpose through legal process issued by a competent authority within the United States. [5 USCA - 5520a]

The Office of Personnel Management has issued final regulations to implement the above law. These regulations apply to all executive branch agencies of the federal government, except the U.S. Postal Service, Postal Rate Commission and General Accounting Office. Separate regulations govern the latter agencies, any agency of the judicial or legislative branch and Congress. Likewise, separate regulations apply to military personnel. [See 5 CFR -- 582.101 & 582.102, appearing at 60 Fed.Reg. 13027, 13030]

Types Of Witholding Orders:

To effect a wage garnishment, the creditor must serve the judgment debtor's employer with a proper earnings withholding order. There are three types of earnings withholding orders.

"Withholding order for support": A "withholding order for support" is an earnings withholding order issued to collect delinquent amounts under a child or spousal support judgment. The order must indicate "on its face" that it is a "withholding order for support." [Ca Civ Pro - 706.030(a)]

"Withholding order for taxes": A "withholding order for taxes" is an earnings withholding order issued to collect a state tax liability. [Ca Civ Pro - 706.072(b)]

All other withholding orders: Withholding orders that are neither for support nor taxes are simply called "earnings withholding orders."

Obligations Of The Employer After Service Of Witholding Order:

When an effective earnings withholding order is served on an employer by the

levying officer or registered process server, the employer must:

Withhold the nonexempt portion of the employee's disposable earnings for all pay periods ending during the "withholding period" (below); and

Pay to the levying officer, by the 15th of each month (or sooner) all funds withheld during the preceding month. [Ca Civ Pro -- 706.022(b), 706.025(a)]

An earnings withholding order is effective 10 calendar days after service and remains in effect until the earliest of the following dates:

The date the employer withholds the full amount required to satisfy the order;

The date of termination in a court order served on the employer;

The date of termination in a termination notice served on the employer by the levying officer;

The date the withholding order falls dormant or is suspended and thus automatically terminates as determined under Ca Civ Pro - 706.032 (debtor leaves employment or earnings are subject to order/assignment with higher priority). [Ca Civ Pro - 706.022(a)]

But Note: If not sooner terminated, a withholding order for support automatically ends one year after the employee stops working for the employer. [Ca Civ Pro - 706.030(c)(1)]

The lien ordinarily continues for one year from the date the judgment debtor's earnings became payable, unless the amount required to be withheld is paid earlier in the manner required by law. [See Ca Civ Pro -- 697.030, 697.040, 706.029]

Issuance And Service Of The Withholding Order:

The official Judicial Council forms generally must be used for all WGL procedures. [Ca Civ Pro -- 706.120, 706.081] However, federal law preempts the form of income withholding for child support (42 USCA - 666). All income withholding orders for child support must be on the standardized federal form Order/Notice to Withhold Income for Child Support.

An earnings withholding order may not issue against earnings of the judgment debtor's spouse unless a court order is obtained upon noticed motion. Reason: Despite the general rule that community property is liable for the debts of a spouse, community property earnings are unique and may not be liable in some situations. [See Ca Civ Pro - 706.109 and Comment thereto]

An earnings withholding order may be obtained by filing an application (below), the original writ of execution and the required fee with the levying officer (not the court) in the county where the order is to be served. The creditor need not provide the levying officer with separate written instructions. [Ca Civ Pro - 706.102(a)]

The earnings withholding order must promptly be issued by the levying officer following the judgment creditor's ex parte application (but a court order is required if the withholding order is against earnings of the debtor's spouse. The levying officer has no discretion to refuse issuance of the order upon filing of a proper application. The fact that the debtor may claim an exemption (and even recover amounts withheld) does not affect initial issuance of the order. [Ca Civ Pro - 706.102(a), and Comment thereto]

The earnings withholding order must be served on the employer within 180 days following issuance of the writ of execution. Otherwise, the order is invalid. [Ca Civ Pro -- 699.530(b), 706.103(c), 706.108(c)] Service may be made by the levying officer or by a registered process server (whether or not the process server issued the earnings withholding order, above). [Ca Civ Pro -- 706.101(a), 706.108(c)]

The employer must be served with:

The original and one copy of the Earnings Withholding Order (the employer's instructions are printed on the reverse of the order form and on a supplement thereto);

The Employer's Return; and

The official Employee Instructions (see Form 6:PP). [Ca Civ Pro -- 706.103(a), 706.108(c)]

When the local child support agency issues a withholding order for support on a notice of levy pursuant to Ca Fam - 17522, the employer must be served with:

The earnings withholding order for support and one copy;

A notice informing the employee of the order's effect and the employee's right to a hearing and certain remedies;

Forms necessary to obtain an administrative review or judicial hearing with instructions on how to file the forms. [Ca Civ Pro - 706.030(b)(3)]

Service on any of the following persons is effective service on the employer:

The managing agent or person in charge of the employee's workplace or the place the employee is paid from; or

Any person to whom a copy of a summons and complaint may be delivered to effect service on the employer (see Ca Civ Pro - 416.10 et seq.). [Ca Civ Pro -- 706.101(a), 706.030(b)(2) (local child support agency serving withholding order for support issued on notice of levy pursuant to Ca Fam - 17522)]

Service may be made by personal delivery upon the employer (see Ca Civ Pro -- 415.10, 415.20). [Ca Civ Pro -- 706.101(b), 706.030(b)(2) (local child support agency serving withholding order for support issued on notice of levy pursuant to Ca Fam - 17522)] The judgment creditor may specifically request that the levying officer make service by personal delivery. [Ca Civ Pro - 706.101(e)]

Service can also be made by registered or certified mail, postage prepaid, with return receipt requested. [Ca Civ Pro - 706.101(b),(c) (state serving withholding order to collect overpayment of unemployment compensation or disability benefits), 706.030 (b)(2) (local child support agency serving withholding order for support issued on notice of levy pursuant to Ca Fam - 17522)] Service by mail is deemed complete at the time the return receipt is executed. [Ca Civ Pro - 706.101(b),(c)] However, if the return receipt is not received within 15 days from the date of mailing, service must be made by personal delivery. Where the state is collecting overpayment of unemployment compensation or disability benefits, the state must refer the withholding order to a levying officer for personal service. [Ca Civ Pro - 706.101(b),(c)]

Earnings Exampt From Garnishment: Federal restrictions on the maximum amount that may be withheld from an employee's earnings are directly incorporated into the WGL. Under these restrictions, the maximum part of the debtor employee's aggregate "disposable earnings" (below) that may be withheld for any work week may not exceed the lesser of:

25% of the employee's disposable earnings for that week; or

The amount by which the disposable earnings for the week exceeds 30 times the federal minimum hourly wage.

This means that at least 75% of an employee's disposable earnings are effectively exempt from all nonsupport earnings withholding orders. Moreover, this exemption is automatic--i.e., no claim of exemption need be made. [Ca Civ Pro - 706.050; 15 USCA - 1673(a); 29 CFR - 870.1 et seq.] An even lesser amount may be withheld if an earnings assignment order for support is in effect against the same earnings.

"Disposable earnings" are those earnings remaining after deduction of any amounts required by law to be withheld. [15 USCA - 1672(b)] These include deductions for social security, federal and state income taxes, state disability insurance and payments to public employee retirement systems.

The automatic exemption does not apply to:

Earnings withholding orders for support (below);

Any court order involving a Chapter 13 bankruptcy proceeding; or

Any debt for federal tax. [15 USCA - 1673(b); Ca Civ Pro - 706.074(b)]

Earnings Withholding For Support: Only one half of a judgment debtor's disposable earnings (above) are exempt from garnishment under an earnings withholding order for support (as opposed to 75% for nonsupport withholding orders, above). [Ca Civ Pro - 706.052(a)]

But Note: upon motion of any interested party, the court may make an "equitable division" of the judgment debtor's earnings. In doing so, the court must take into account the needs of all persons whom the judgment debtor is required to support (e.g., both the debtor's former spouse and present family). [Ca Civ Pro - 706.052(b)] The court may order more or less than 50% of the judgment debtor's earnings to be withheld, so long as the maximum amount withheld does not exceed the maximum permitted under federal law (below). [Ca Civ Pro - 706.052(c)]

In addition to the automatic exemption for nonsupport withholding orders, that portion of an employee's earnings necessary for the support of the judgment debtor or his or her family (including a spouse or former spouse) is exempt from nonsupport earnings withholding orders (Ca Civ Pro - 706.051(a),(b)). Thus, under appropriate circumstances, an employee may be able to exempt all of his or her earnings from a nonsupport withholding order.

To obtain this exemption, the judgment debtor must file a timely claim of exemption with the levying officer. If the judgment creditor fails to oppose the clai, the exemption is automatically granted and the earnings must be released. A claim of exemption can be made by the judgment debtor any time during the withholding period. [Ca Civ Pro - 706.105(a)] An earnings withholding order is effective 10 calendar days after service.

An exemption is claimed by filing with the levying officer (not the court) an original and one copy of the official Claim of Exemption form; and a Financial Statement. [Ca Civ Pro - 706.105(b)] After the exemption claim is filed, the levying officer must promptly send to the judgment creditor (by first-class mail, postage prepaid, to the address stated in the withholding order application) a copy of the Claim of Exemption, a copy of the Financial Statement; and a Notice of Filing Claim of Exemption (below). [Ca Civ Pro - 706.105(c)]

A judgment creditor wishing to oppose the claim of exemption must file a Notice of Opposition with the levying officer within 10 days after the date the Notice of Claim of Exemption was mailed. [Ca Civ Pro - 706.105(d)] (This 10-day period is not extended where the claim of exemption was served by mail; see Ca Civ Pro - 684.310 and Comment to Ca Civ Pro - 706.105.) In addition to timely filing the Notice of Opposition, the judgment creditor must file with the court within 10 days after the levying officer mailed the Notice of Claim of Exemption, a Notice of Motion for an Order Determining the Claim of Exemption. [Ca Civ Pro - 706.105(e)] The judgment creditor must also complete and file with the court the official form Notice of Hearing on Claim of Exemption. [Ca Civ Pro - 706.105(e)] The judgment creditor must give written notice of the hearing to the levying officer at least 16 court days before the hearing. [Ca Civ Pro -- 706.105(e), 1005(b)] At least 16 court days before the hearing, the judgment creditor must also serve a copy of both the notice of opposition and the notice of hearing on the judgment debtor (and his or her attorney if requested in the claim of exemption) at the address set forth in the claim of exemption. Proof of service must be filed with the court. [Ca Civ Pro -- 706.105(e), 1005(b)]

If the notice of opposition and notice of motion are timely filed, the court hearing on the claim of exemption must be held no more than 30 days after the notice of motion is filed (unless continued by the court for good cause). The levying officer must file the originals of the claim of exemption and notice of opposition with the court. [Ca Civ Pro - 706.105(e)] If the court grants the exemption claim, it may direct that the earnings withholding order be modified or terminated. The effective date of termination can precede the date of the hearing. The court may also order that any exempt earnings previously withheld be repaid to the judgment debtor. [Ca Civ Pro - 706.105(g),(i)] The court need not make any findings. [Ca Civ Pro - 706.106] The court clerk must transmit a certified copy of the order modifying or terminating the earnings withholding order to the levying officer. The levying officer must then promptly serve on the judgment debtor's employer either a copy of the modified earnings withholding order or a notice that the withholding order has been terminated. [Ca Civ Pro - 706.105(g)]

Priority Between Withholding Orders: Generally, if an earnings withholding order is served while a prior withholding order is still in effect for the same employee, the subsequent order is ineffective. The employer may not withhold earnings pursuant to the subsequent order. [Ca Civ Pro - 706.023(c)] If two or more earnings withholding orders are served for the same employee on the same day, the employer must comply with the order issued for the judgment that was first entered (the date of entry is indicated on the order). If the judgments were entered on the same day (a rare event), the employer has complete discretion to choose which order to comply with; but must comply with one of the orders. [Ca Civ Pro - 706.023(b)]