Child support and garnishment: the limits an employer must apply

An income withholding order arrives for an employee. The amount on it is not the amount you withhold — it is the amount you withhold if the law allows it. Getting that ceiling wrong costs real money, because an employer that fails to withhold becomes liable for the amount itself.

Start with disposable earnings

Every limit is a percentage of disposable earnings, which the Department of Labor defines as “the amount of earnings left after legally required deductions are made” — federal, state and local taxes, the employee’s share of Social Security and Medicare, state unemployment insurance, and retirement withholding required by law.

What does notcome out first is the longer list: “voluntary wage assignments, union dues, health and life insurance, contributions to charitable causes, purchases of savings bonds, retirement plan contributions (except those required by law) and payments to employers for payroll advances.” A 401(k) deferral and a health premium reduce taxable wages; they do not reduce the base a garnishment is measured against.

Ordinary garnishments: the lesser of two numbers

For a creditor garnishment — not support, not bankruptcy, not a tax levy — 15 U.S.C. §1673(a) caps the week at the lesser of 25% of disposable earnings or the amount by which disposable earnings exceed thirty times the federal minimum hourly wage. The minimum wage has been $7.25 since July 24, 2009, which puts the weekly floor at $217.50.

A warning for anyone coding from the regulation: 29 CFR §870.10 still prints tables built on the 1991 minimum wage of $4.25. The regulation was never renumbered, but it is written to follow the wage — “When the minimum wage increases, the proportionate amount of earnings which may not be garnished also increases.” Use the formula, never the printed dollars.

Support orders follow a different rule entirely

Section 1673(b)(1)(A) takes support orders out of the 25% rule altogether and then sets its own ceilings in (b)(2):

• 50% where the employee is supporting another spouse or dependent child.
• 60% where they are not.

And then the part that is almost always described incorrectly. The statute does not add five points. It says the 50% “shall be deemed to be 55 per centum” and the 60% “shall be deemed to be 65 per centum” — a redefinition of the ceiling — and it applies “if and to the extent that such earnings are subject to garnishment to enforce a support order with respect to a period which is prior to the twelve-week period which ends with the beginning of such workweek.”

Read that trigger carefully: it is a periodtest, not a balance test. The question is whether the obligation being enforced predates the trailing twelve weeks — not whether the arrears happen to exceed twelve weeks’ worth of payments.

When more than one order arrives

29 CFR §870.11 handles the stack. If 25% was already withheld for an ordinary garnishment, the CCPA permits an additional support withholding only up to “the difference between 25% and the applicable percentage (50-65%).” And when 25% or more has already gone to a support order that has priority under state law, no ordinary garnishment may take anything further.

What happens if you do not withhold

Federal law requires every state to hold the employer liable: 42 U.S.C. §666(b)(6)(C) — the employer “must be held liable to the State for any amount which such employer fails to withhold.” The federal withholding order form says the same to the employer directly: you are liable for “both the accumulated amount you should have withheld and any penalties set by state or tribal law.”

In North Carolina, §110-136.8(e) makes a payor who “willfully refused to comply” liable for the amount that should have been withheld. One distinction worth getting right: the civil penalties of $100, $500 and $1,000 in that same subsection attach to retaliating against the employee — discharging, refusing to employ or disciplining them because of the withholding — not to the failure to withhold. Secondary summaries routinely merge the two.

North Carolina also sets the mechanics: send the withheld amount within seven business days of the pay date, start with the first payment in the first pay period occurring 14 days after service, and withhold for child support before any other legal process against the same income.

PayrollPro applies these ceilings in the engine, in legal order, and records what could not be withheld as arrears with its reason — because the shortfall is the part someone has to answer for later.