Wage Garnishment - for unpaid loan
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I am employed by a small FL based bank. One of my fellow employees has a loan with our bank. This employee is over due on a loan payment.
Management wants me to take the employee's paycheck from them after all taxes and legal deductions are taken.
Are we legally allowed to take part of the employee's disposable earnings? Per Title III of the CCPA are we allowed to take the weekly amount not to exceed the lesser of two figures - 25% of the employee's disposable earnings or the amount by which an employee's disposable earnings are greater than 30 times the federal min wage?
Any advice is appreciated.
Comments
If the loan was taken as a customer of the bank through normal bank loan channels, I don't think you can do a payroll deduction on it without a garnishment order from a court. That's not an employer loan, that's a regular bank loan and you would be wise not to mix the two.
If the loan was made as an employer making a loan to an employee, the laws of your state will govern what you may deduct and how it must be done.
Can you please verify that this is in fact a payroll loan and not a bank loan? Also, do you have any written agreement with the employee concerning the loan or the circumstances under which the employer may make payroll deductions?
(1) Is the employee the head of the household? If so, Florida does not allow for garnishments.
(2) From federal laws, you must make sure that by taking the deduction, you do not drop below minimum wage
(3) It is my understanding that you would still need a court order to garnish wages if you didn't have an employee's authorization to do so.
Here is a good article that discusses it:http://wagegarnishmentlesson.com/Florida+Wage+Garnishment.1175.htm
"In Florida, wage garnishment in some instances is prohibited. Florida Statutes §222.11 details an exemption known as the “head of family” exemption in which a person responsible for more than 50 percent of another person’s support is exempt. The purpose of the public policy is to ensure the dependants of a family are provided the support they would normally receive. In theory, this also helps support the state, as it would ultimately fall to Florida and its taxpayers to support the debtor’s dependents if income was taken away.
Garnishments are usually a last resort for creditors and collectors. It can only be obtained through a writ (court order) and for the case to be filed, there needs to be ample evidence of the plaintiff having no other recourse. A debtor does have time to rectify the situation before it gets this far, but if it does and it’s in the state of Florida, then the above law applies if the person can prove to be the head of a household. This claim can be supported through tax returns and other documentation.
In addition to the above Florida exemption for the head of a household, there are also exemptions regarding Social Security Administration benefits and the Consumer Credit Protection Act. In Florida, minimum wage does not match that of the federal government. As a result, the federal maximum placed on wage garnishment may come into effect.
The Consumer Credit Protection Act states that a wage earner must be left a minimum amount of take-home pay after garnishment. The amount that can be garnished is up to 25 percent of a person’s net disposable earnings. Determining the garnishment amount ties into how much remains after the garnishment is taken. The law states that after garnishment, a wage earner must be left 30 times the federal minimum wage per week ($5.15/hour). Since Florida’s minimum wage is not at the $5.15 level, the amount that can be garnished for debtors is often very low or in some cases, totally exempt."
Thank you very much for this information. I thought the answer was no but did not have the information needed to back up my decision.
Thanks again!