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What Is Wage Assignment?

Definition and example of wage assignment, how wage assignment works, wage assignment vs. wage garnishment.

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A wage assignment is when creditors can take money directly from an employee’s paycheck to repay a debt.

Key Takeaways

• A wage assignment happens when money is taken from your paycheck by a creditor to repay a debt.
• Unlike a wage garnishment, a wage assignment can take place without a court order, and you have the right to cancel it at any time.
• Creditors can only take a portion of your earnings. The laws in your state will dictate how much of your take-home pay your lender can take.

A wage assignment is a voluntary agreement to let a lender take a portion of your paycheck each month to repay a debt. This process allows lenders to take a portion of your wages without taking you to court first.

Borrowers may agree to allow a lender to use wage assignments, for example, when they take out payday loans . The wage assignment can begin without a court order, although the laws about how much they can take from your paycheck vary by state.

For example, in West Virginia, wage assignments are only valid for one year and must be renewed annually. Creditors can only deduct up to 25% of an employee’s take-home pay, and the remaining 75% is exempt, including for an employee’s final paycheck.

If you agree to a wage assignment, that means you voluntarily agree to have money taken out of your paycheck each month to repay a debt.

State laws govern how soon a wage assignment can take place and how much of your paycheck a lender can take. For example, in Illinois, you must be at least 40 days behind on your loan payments before your lender can start a wage assignment. Under Illinois law, your creditor can only take up to 15% of your paycheck. The wage assignment is valid for up to three years after you signed the agreement.

Your creditor typically will send a Notice of Intent to Assign Wages by certified mail to you and your employer. From there, the creditor will send a demand letter to your employer with the total amount that’s in default.

You have the right to stop a wage assignment at any time, and you aren’t required to provide a reason why. If you don’t want the deduction, you can send your employer and creditor a written notice that you want to stop the wage assignment. You will still owe the money, but your lender must use other methods to collect the funds.

Research the laws in your state to see what percentage of your income your lender can take and for how long the agreement is valid.

Wage assignment and wage garnishment are often used interchangeably, but they aren’t the same thing. The main difference between the two is that wage assignments are voluntary while wage garnishments are involuntary. Here are some key differences:

Once you agree to a wage assignment, your lender can automatically take money from your paycheck. No court order is required first, but since the wage assignment is voluntary, you have the right to cancel it at any point.

Wage garnishments are the results of court orders, no matter whether you agree to them or not. If you want to reverse a wage garnishment, you typically have to go through a legal process to reverse the court judgment.

You can also stop many wage garnishments by filing for bankruptcy. And creditors aren’t usually allowed to garnish income from Social Security, disability, child support , or alimony. Ultimately, the laws in your state will dictate how much of your income you’re able to keep under a wage garnishment.

Creditors can’t garnish all of the money in your paycheck. Federal law limits the amount that can be garnished to 25% of the debtor’s disposable income. State laws may further limit how much of your income lenders can seize.

Illinois Legal Aid Online. “ Understanding Wage Assignment .” Accessed Feb. 8, 2022.

West Virginia Division of Labor. “ Wage Assignments / Authorized Payroll Deductions .” Accessed Feb. 8, 2022.

U.S. Department of Labor. “ Fact Sheet #30: The Federal Wage Garnishment Law, Consumer Credit Protection Act's Title III (CCPA) .” Accessed Feb. 8, 2022.

Sacramento County Public Law Library. “ Exemptions from Enforcement of Judgments in California .” Accessed Feb. 8, 2022.

District Court of Maryland. “ Wage Garnishment .” Accessed Feb. 8, 2022.

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What Is a Wage Assignment?

How wage assignment works.

• Why Are Wage Assignments Voluntary?

Wage Garnishment

The bottom line.

• Credit & Debt
• Debt Management

Wage Assignment: What It Means, How It Works

Wage assignment is the act of taking money directly from an employee's paycheck in order to pay back a debt obligation. Such an automatic withholding plan may be used to pay back a variety of debt obligations, including back taxes, defaulted student loan debt, and both child and spousal support payments.

Key Takeaways

• A wage assignment takes funds directly from an employee's paycheck to pay back a debt.
• How wage assignments are regulated varies by state, with some states even allowing for voluntary child support agreements.
• A wage garnishment is an involuntary deduction and requires a court order.

Wage assignments are typically incurred for debts that have gone unpaid for a prolonged period of time. Employees may sometimes opt for a voluntary wage assignment to pay for things like union dues or to contribute to a retirement fund.

A wage assignment is processed as part of an employer's payroll procedure. The employee's paycheck is decreased by the amount of the assignment and noted on their pay stub.

A wage assignment is often a lender's last resort to receive repayment from a borrower who has previously failed to pay a debt obligation.

Wage assignments are a valuable tool for collecting unpaid debts, but unfortunately, they may be associated with abusive lending practices . If you're struggling with your debt, one of the best debt relief companies or credit counseling agencies may be able to help you get back on track before a wage assignment is incurred.

What Makes Wage Assignments Voluntary?

In a voluntary wage assignment, a worker essentially asks their employer to withhold a portion of their paycheck and send it to a creditor to pay off a debt. Loan agreements may sometimes include a voluntary wage assignment clause in their terms should the borrower default on their loan.

Payday lenders often include voluntary wage assignments into their loan agreements to better their chances of being repaid. Laws regarding wage assignments vary by state.

For example, in West Virginia, wage assignments are capped at 25% of a worker's take-home earnings, the employee and the employer must sign the agreement, and agreements must be renewed annually. Under Illinois law, a lender cannot resort to wage assignment until a debt is 40 days in default. The wage assignment cannot continue for more than three years, and the worker can stop the wage assignment at any time.

Involuntary wage deductions, known as wage garnishments , require a court order and are most likely to be employed to collect spousal and child support payments that have been ordered by a court. Wage garnishments may also be used to collect unpaid court fines or student loans that have been defaulted on.

Several states allow individuals to sign up for voluntary child support agreements. In such a case, both parents must agree to a plan. Once that happens, a voluntary wage assignment may begin. If a child support or welfare agency is involved, they would have to approve any plan.

How Long Can I Have a Wage Assignment?

Since wage assignments are voluntary, the length of time that you use one can vary. Some loans include a wage assignment agreement, so you'll have to check the language of your loan to determine your obligation. Each state also has its own regulations regarding wage assignments.

How Much of My Income Can Go to Wage Assignments?

Every state has its own regulations, but typically 15–25% of your disposable income can be designated for wage assignments.

Is Wage Garnishment the Same as Wage Assignment?

While they are similar, wage garnishment and assignment are not the same. Wage garnishment is an involuntary paycheck deduction, typically ordered to repay child support, student loans, tax debt, or bankruptcy. A wage assignment is voluntary and may be used to repay a consumer debt.

Wage assignments may be a useful tool to help you pay down a debt. Wage assignments are voluntary but they may be hidden in the fine print of some loan products, so read everything carefully before signing. Check the regulations in your state to determine if your wage assignment is revocable.

West Virginia Division of Labor. " Wage Payment and Collection (WPC) Act: Payroll Deductions and Wage Assignments ," Page 3.

Illinois General Assembly. " (740 ILCS 170/) Illinois Wage Assignment Act ."

U.S. Department of Labor. " Fact Sheet #30: The Federal Wage Garnishment Law, Consumer Credit Protection Act's Title III (CCPA) ."

Illinois Legal Aid. " Understanding Wage Assignment ."

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Wage Assignment

Wage assignment refers to a legal process where child support payments are automatically deducted from the paying parent’s wages or income and forwarded to the receiving parent or the state child support enforcement agency. It is a mechanism designed to ensure timely and consistent payment of child support obligations, reducing the risk of delinquency and providing financial support for the child’s needs.

What Is Wage Assignment?

In Texas, wage assignment, also known as income withholding, is a common method used to enforce child support orders. Child support payments are automatically deducted from the paying parent’s wages or income. This helps streamline the payment process and reduce the risk of non-payment or delinquency.

Wage Assignment in Texas Child Support

Here’s how wage assignment works in Texas.

Court Order for Wage Assignment

When a child support order is established or modified, the court may include provisions for wage assignment as part of the order. The court orders the paying parent’s employer to deduct a specified amount of child support from the parent’s wages or income and send it directly to the state child support enforcement agency or the receiving parent.

Notification to the Employer

Once the court orders wage assignment, the paying parent’s employer is notified of the obligation to withhold child support from the employee’s wages. The employer is required by law to comply with the court order and withhold the specified amount of child support from the employee’s paycheck.

Calculation of Child Support Amount

The amount of child support subject to wage assignment is determined based on the child support guidelines established by Texas law. The guidelines take into account factors such as the parents’ income, the number of children, and any special needs of the child.

The court calculates the amount of child support owed by the paying parent, and this amount is then deducted from the parent’s wages through wage assignment.

Relevant Law: Texas Family Code Chapter 154 .

Frequency of Payments

Child support payments deducted through wage assignment are typically made on a regular schedule, such as weekly, bi-weekly, or monthly, depending on the paying parent’s pay schedule. The employer is responsible for deducting the child support amount from the employee’s paycheck and forwarding it to the appropriate recipient, usually the state child support agency or the receiving parent.

Enforcement of Wage Assignment

Employers in Texas are legally obligated to comply with wage assignment orders issued by the court. Failure to comply with a wage assignment order can result in penalties, fines, and other legal consequences for the employer. Additionally, the state child support enforcement agency has the authority to enforce wage assignment orders and take action against non-compliant employers.

Modification and Termination

Wage assignment orders can be modified or terminated under certain circumstances. If there is a change in the paying parent’s income, employment status, or other relevant factors, either parent can petition the court to modify the wage assignment order. Likewise, if the child support obligation is fulfilled or if the child support order is terminated, the wage assignment order may be terminated accordingly.

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Involuntary and Voluntary Pay Deductions: Texas

Federal law and guidance on this subject should be reviewed together with this section.

Author: Vicki M. Lambert , The Payroll Advisor

• An employer must begin withholding for a child support order no later than in the first pay period that occurs after the date the employer receives the order. Withheld amounts must be remitted on the employer's regular pay dates, or within two business days thereafter if remitting the payment electronically. Withholding is limited to a maximum percentage of a worker's disposable earnings. Employers may deduct an administrative fee. See Child Support Withholding .
• Current wages for personal service are not subject to garnishment. See Creditor Garnishment Withholding .
• Employers in Texas are under no statutory obligation to honor voluntary wage assignments; they may be under a contractual obligation to do so, however. See Voluntary Wage Assignments .

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Wage Assignments and Garnishments: What Finance Leaders Need to Know

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Wage assignments and garnishments practices: Here are three things finance leaders must internally audit.

Wage assignments and wage garnishments are not the same. Each reflects a different process subject to different applicable laws. While there is always potential for a DOL Wage and Hour Division audit, financial leaders should internally audit their own processes to ensure compliance and efficiency while minimizing stress and anxiety for the employer and the employee. Here are three things to consider when conducting those audits.

1. Compliance

Wage assignments and wage garnishments differ in many ways. In fact, a wage assignment is not a garnishment. A wage assignment is a voluntary agreement between the employee and creditor where an amount is withheld from the employee's paycheck to satisfy a debt owed to a third-party recipient, whereas under a wage garnishment, the amount withheld from the employee's check is typically obtained through a court order initiated by the creditor.

Adding to the compliance challenge, there are several different types of wage garnishments, often with differing rules for each. For example, child support, bankruptcy and student loans are all types of wage garnishments. Wage garnishments for child support obligations are substantially governed by state law, which varies state to state, whereas garnishments for a bankruptcy plan are governed by federal law and garnishments for student loan debts are governed by either state or federal law, depending on the financing.

2. Efficiency

Businesses must be able to confirm when wage garnishments are initiated, when they cease and when more than one applies and in what order. This is what can make these withholdings complex — and messy. By having trackable systems in place, efficiency can be achievable.

3. Minimizing Stress and Anxiety

According to Workforce , wage garnishments can affect employee morale. Having wages withheld from paychecks may be a negative employee experience, especially when the employer has to get involved. For employers that are preparing audit-ready workplaces, these organizations face their own stress by potentially facing liability for noncompliance with respect to wage garnishment withholdings.

Having prudent processes in place may not only help with compliance and efficiency for the employer, but can also help alleviate stress for both the employee and the employer.

Learn about the ADP SmartCompliance® Wage Garnishment Module .

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Home > Definitions > Divorce & Family Law > Child Custody > Wage Assignment

Wage Assignment

What is Wage Assignment?

Wage assignments allow creditors to take money directly from an employee’s paycheck to pay off a debt. They are voluntary agreements between the employee and the creditor. Due to the fact that employees must sign documents authorizing a creditor to take money from their paycheck, wage assignments do not require court approval. These arrangements differ from wage garnishments, in which a creditor must go to court to obtain permission to collect part of a debtor’s wages. Moreover, the employee typically has the right to terminate the wage assignments, while one must go through a legal process to stop a wage garnishment. 

The United States often uses wage assignments to collect child support payments. Wage assignments may also be utilized to pay off other debts such as unpaid taxes or loans. 

Key Takeaways

• A wage assignment is a voluntary agreement that allows creditors to collect money directly from an employee’s paycheck to repay a debt.
• Wage garnishments are used to repay various debt obligations such as taxes, child support, or loans. 
• State laws regulate the conditions and limitations for wage assignments. 

Wages Assignment Limitations

Wage assignments are not regulated by federal law and therefore are not required to follow the Federal Consumer Credit Protection Act. The laws concerning wage assignment vary from state to state. Following are a few examples of restrictions in various states:

• Illinois does not allow wage assignments unless the debt has gone unpaid for at least 40 days.
• In West Virginia, wage assignments are limited to 25% of an employee’s take-home earnings. 
• Employers in Texas have no statutory obligation to honor voluntary wage assignments, but they may be required to do so under a contractual obligation.
• New York does not allow wage assignments to exceed 10% of one’s gross income.
• A spouse or domestic partner must also sign the wage assignment contract if the employee is married or has a domestic partner in Washington or Wisconsin.
• Some states may require that the agreements be renewed annually and prohibit the assignments from lasting longer than three years. Additionally, various states allow wage assignments only when it is used to pay child support .

Bottom Line

W age assignments are undoubtedly a complicated subject. As a matter of fact, plenty of people are not aware of the differences between wage assignments and wage garnishments . Also, although wage assignments are voluntary, employees are not always aware that they agreed to them. Wage assignment provisions may be hidden among the fine print in consumer contracts and loan documents, and employees may not learn about these clauses until it is too late. This is why it is essential to hire proper legal representation to review important contracts before signing them. A seasoned attorney will be able to help you handle these complex arrangements.

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Wage assignment and employers’ responsibilities

Tough economic times raise some tricky HR issues—for example, when an employee’s financial straits begin to affect his employer.

Must we honor a payday loan wage assignment?

Q. An employee borrowed money from a payday loan service at a very high interest rate that I feel is unfair. The payday loan service sent me a “wage assignment” notice and told me that our company must withhold money from his paychecks.  What is a wage assignment, and does our company actually have to honor it? A. A wage assignment is a document that allows a creditor to attach part of the employee’s wages if the employee fails to pay a specific debt. The creditor does not have to obtain a judgment in a court proceeding before requesting payment. Under the Illinois Wage Assignment Act (740 ILCS 170), private employers are obligated to honor a creditor’s properly served demand for a valid wage assignment, unless an employee presents a timely, valid , written defense to the wage assignment.

What constitutes a valid assignment?

Q. How can I tell if a wage assignment is valid? How long is it valid? A. A valid wage assignment document must have the words “Wage Assignment” printed or written in boldface letters of not less than ¼ inch in height at the head of the wage assignment and one inch above or below the line where the employee signs the assignment. The employee must have signed the document in person, and the document must show the date of execution, the employee’s Social Security number, the name of the employer at the time of execution, the amount of money loaned or the price of the articles sold or other consideration given, the rate of interest or time-price differential to be paid, if any, and the date on which such payments are due. A wage assignment is valid for no more than three years after the employee signs it and the employer’s name appears on it. If the employee changes jobs, the wage assignment is valid for two years, even though the new employer’s name does not appear on the assignment.

Handling wage assignments

Q. How does the wage assignment process start? A. Assuming that the wage assignment document complies with the formal requirements, the creditor must serve “demand to withhold” on the employer. The demand is valid only if:

The employee has defaulted on the debt secured by the assignment for more than 40 days, and the default has continued to the date of the demand.

The demand contains a correct statement of the amount the employee is in default, and the creditor provides an original or a photocopy of the assignment to the employer.

The creditor has served a “notice of intention to make the demand” upon the employee, with a copy to the employer, by registered or certified mail not less than 20 days before serving the demand.

Putting on the brakes

Q. Can an employee stop the wage assignment process? A. The employee does have a right to contest the demand. If an employee has a legal defense to the wage assignment, the employee may—within 20 days after receiving a notice of demand or within five days after the employer is served with the demand—notify the employer, in writing, of any defense to the wage assignment and send a copy of the written defense to the creditor by registered or certified mail.   As a result, the employee’s wages are not subject to a demand served by the creditor unless the employer receives a copy of a subsequent written agreement between the creditor and the employee authorizing such payments. Similarly, if the creditor receives a copy of the defense prior to serving its demand upon the employer, the creditor may not serve the demand upon the employer.  Whether the employee’s defense is legally valid is not an issue the employer must resolve. Instead, the employee and the creditor may attempt to reach another agreement or the creditor may simply bring a separate lawsuit against the employee to collect an outstanding debt. 

Calculating the wage assignment payment

Q. How much must the employer withhold—and when? A. The employer must begin payment to the creditor no sooner than five business days after service of such a demand.  The employer must withhold the lesser of:

15% of weekly gross wages

The amount by which the disposable earnings for a week (pay remaining after federal and state taxes, Social Security deductions and any other amounts required by law to be withheld, including required retirement contributions) exceed 45 times the federal minimum wage, unless a notice of defense is received within that five-day period.

The employer shall be paid a fee of $12 for each wage assignment. That $12 is credited against the debt.

WHAT TO READ NEXT

Complying With Wage Garnishments in Texas—What You Need to Know

When you have tens of thousands of employees, it is very likely that your payroll and human resources (hr) departments receive wage garnishment orders for employees every week. texas law is restrictive in this area, and it is important that hr and payroll employees know which types of wage garnishment…...

When you have tens of thousands of employees, it is very likely that your payroll and human resources (HR) departments receive wage garnishment orders for employees every week. Texas law is restrictive in this area, and it is important that HR and payroll employees know which types of wage garnishment orders an employer must follow.

Which Garnishment Orders Must Texas Employers Follow?

The Texas Constitution, in Article 16, section 28, specifically prohibits an employer from garnishing a Texas employee’s wages except for court-ordered child support or spousal support payments. A Texas employer must also comply with tax levies executed by the Internal Revenue Service (IRS), garnishment orders for federally guaranteed student loans, and garnishment orders for federal debts that fall under the federal Debt Collection Improvement Act (DCIA). This is because each of the statutes under which these orders and levies are issued expressly supersede state law. Thus, in general, Texas employers must comply with garnishment orders for federal debts or child support or alimony orders but not garnishment orders that involve creditor debts. In fact, employees may sue their employers for wrongful garnishment if they comply with garnishment orders involving creditor debts.

Which Garnishment Orders Must Multi-State Texas Employers Follow?

What about Texas employers that have multi-state operations? The employer may be required to comply with other types of creditor garnishments on the wages of their Texas employees under the “full faith and credit doctrine” of Article IV of the U.S. Constitution, which requires each state to honor “the public acts, records, and judicial proceedings of every other state.”  The situation may occur when a Texas employer (1) has facilities in other states and (2) is subject to the jurisdiction of the state that issued the wage garnishment.

One of the only cases to deal with the issue of how Texas employers should handle out-of-state wage garnishments is Knighton v. IBM Corp , 856 S.W.2d 206 (Tex. App.—Houston [1 st Dist. 1993], writ denied). The Knighton case involved an IBM employee who was required to pay alimony to his wife under a Florida divorce decree. IBM later transferred the employee to Texas where he stopped making alimony payments. The Florida court that had entered the divorce decree then entered a wage garnishment order requiring IBM to pay the employee’s ex-wife the alimony amount from the employee’s salary and retirement fund.

The employee did not contest the Florida order but rather filed suit in a Texas state court arguing that the out-of-state judgment could be enforced only through Texas collection procedures. At the time, Texas laws did not permit employees’ wages to be garnished for alimony. The court held that the garnishment order was enforceable, explaining that “[a] state cannot deny full faith and credit to another state’s judgment solely on the ground that it offends the public policy of the state where it is sought to be enforced.” Most legal commentators have interpreted the reasoning in this decision to encompass other types of garnishments, including creditor garnishments.

Four Steps Employers Can Take To Handle Garnishments

When faced with one or multiple wage garnishment orders for one employee, an employer should consider taking the following actions:

• Determine whether the employee is currently working for the employer.
• Review each order to determine which is allowed under Texas law. For example, if the employer is based solely in Texas and receives a child support order from the Texas Attorney General, a wage garnishment for a federal debt from the U.S. Treasury, and a creditor wage garnishment from Illinois (where the employer does not have facilities), the employer will be required to comply only with the first two orders.
• Track which wage garnishment order was received first. The general rule is that an employer should garnish wages chronologically according to when the garnishment order was received. A garnishment received first should be handled before each subsequent order, as long as doing so does not violate the statutorily provided garnishment amount. For example, for federal debts, an employer may garnish only up to 15 percent of the employee’s salary, and a garnishment for a federal debt may not bring the employee’s salary below minimum wage. The federal DCIA, however, states that employers must comply with family or child support orders before complying with DCIA orders—even if the DCIA order was received first.
• Employers that do not have to comply with the garnishment order should not file a formal answer with the court that issued the garnishment. Instead, the employer may wish to call the attorney who filed the wage garnishment to discuss Texas law on the issue. Most attorneys will then withdraw the garnishment order against the employer.

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Wage Assignments in Consumer and Other Contracts

Most of the time an employee knows when his wages are about to be garnished: He is sued, the court enters a judgment against him for the amount owed, and thereafter a wage garnishment order ensues. The employee has plenty of time to plan for it, forewarn his employer, and make the process as palatable as possible, should a repayment arrangement not be possible.

Not so for many of the so-called “voluntary” wage assignments that are being included in consumer credit and loan agreements with greater regularity than ever before. These provisions allow the creditor to skip the formality, delay, and expense of the legal process altogether, and go straight to the employer with a demand for garnishment.

An employee typically does not learn about this kind of garnishment until after the garnishment has taken place and he notices his pay check is short.

Difference between Wage Assignments and Wage Garnishment Orders

Technically speaking, a wage assignment is a provision in a private agreement — often a consumer credit agreement like the ones used in buying a refrigerator.

The “wage assignment” provision assigns the borrower’s future wages to the creditor in the event of default by non-payment. If a default occurs, the creditor in effect forecloses on the security (the wages) by sending a garnishment demand to the employer. Usually, the letter is written by the creditor’s attorney or billing department.

To enforce a wage assignment, no court process is involved. That’s the nature of the provision. It says no court process need be involved and authorizes the creditor to skip the time and expense of court and go straight to the employer. It also, of necessity, eliminates the debtor’s opportunity to challenge the debt in court or seek limitations on the garnishment.

Most garnishments are based on a judgment or court order and constitute official orders of the court. The request for garnishment is made to the court and the court grants the request by issuing a garnishment order. This is the case for most wage garnishments for child support.

Types of Voluntary Wage Assignments

Voluntary wage assignments, often simply called “wage assignments,” are those that the indebted employee enters into by agreement. He may agree to it by signing a consumer credit or loan agreement, or he may agree to repay a debt by entering into a repayment agreement with a wage assignment provision.

The typical wage assignment provision allows the employer to take the employee’s future wages as security for the debt involved. In the event of default or nonpayment, it authorizes the creditor to go straight to the employer with a demand for wage garnishment, no court filing or judgment required.

Considering these wage assignments as “voluntarily” is a stretch. Most borrowers don’t read the fine print in consumer contracts and loan papers, have no bargaining strength to oppose these provisions even if they want to, and don’t learn about the wage assignment until it is too late to do anything about it.

Nonetheless, unlike a court order, they do have a voluntary component in that the borrower chose to obtain the credit and afterwards to use it to buy goods or services or receive cash.

Federal Garnishment Law Does Not Protect Wage Assignments

In 1970, Congress passed Title III of the Consumer Credit Protection Act. Under that Act, the federal government took control over wage garnishment proceedings for the first time.

Generally speaking, this law limits the extent to which earnings can be garnished to 25% of “disposable earnings” or to amounts above 30 times minimum wage, whichever is less. It also prohibits the employer from terminating an employee for any wage garnishment based on a single debt.

The definition of “disposable earnings” is key to the determination of the maximum allowed garnishment. “Disposable earnings” means earnings after reduction for legally-required deductions like federal, state and local taxes, the employee’s share of State Unemployment Insurance and Social Security, and Worker’s Compensation.

Importantly, the permitted deductions DO NOT include sums withheld as part of a voluntary wage assignment; as such deductions are not legally required. What this means is that wage garnishment protections do not take into account the effect of voluntary wage assignments. Also, they do not apply to real estate purchases (which have specific contracts).

Furthermore, because wage assignments are not technically considered garnishment under federal law, an employer can lawfully terminate an employee for a single garnishment based on a voluntary wage assignment. Put another way, the anti-termination protections of federal law do not apply to wage assignments.

State Law Limitations on Wage Assignments

Many states have passed laws making wage assignments invalid, due to their intrusive and potentially devastating effect on borrowers. Some states bar any form of wage assignment, while others limit wage assignments to only child or spousal support.

Still others require the written consent of both spouses, or the execution of an entirely separate document addressing the assignment (so as to prohibit it from being buried in the fine print). In all cases, the employer need not comply with an illegal wage assignment, and often would be legally liable for doing so.

Needless to say, the field of voluntary wage assignments is a complicated one. Consulting with an experienced labor and employment, debtor-creditor, and/or consumer counsel is an important part of properly navigating this area of employment.

Citations/references

Federal statute: title iii, consumer credit protection act (ccpa), 15 usc, §§1671 et seq., code of federal regulations: 29 cfr part 870, u.s. wage and hour division: fact sheet #30 – the federal wage garnishment law, consumer credit protection act’s title iii (ccpa), field operations handbook – 02/09/2001, rev. 644, chapter 16, title iii – consumer credit protection act (wage garnishment), summary of state laws on garnishment: http://www.nolo.com/legal-encyclopedia/free-books/employee-rights-book/chapter2-9.html.

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