By Catherine Schlomann Robertson
Pahl & McCay
225 West Santa Clara Street
San Jose, California 95113
408/286-5100 (phone); 408/286-5722 (fax)
Please understand that the information discussed in this Article is general in nature and is not intended to be legal advice. It is intended to assist owners and managers in understanding this issue area, but it may not apply to the specific fact circumstances or business situations of all owners and managers. You may need to consult applicable state and local laws. For specific legal advice, consult your attorney.
If your court judgment is owed to you by a debtor who works outside of the home, you may be able to intercept up to 25% of his wages to satisfy your judgment. This process, permitted in nearly every state, is called a wage garnishment. You can garnish wages relatively quickly and cheaply if:
- the debtor receives a regular wage--he is not self employed
- the debtor's pay is above the poverty line
- other wage garnishments aren't already in effect, unless your wage garnishment is for child or spousal support, and
- the debtor does not quit the job, contest the garnishment, or file for bankruptcy
Under the California Wage Garnishment Act, all private and public employers are obligated to honor wage deduction orders directing an employer to withhold from or garnish an employee’s wages for nonpayment of a debt. By using the procedures of the Wage Garnishment Law, a judgment creditor may compel an individual judgment debtor’s employer to withhold the non-exempt portion of a debtor’s disposable incomes for payment directly to the sheriff. 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 non-debtor’s spouse.
Earnings under the Wage Garnishment Law refer to all compensation payable by an employer to an employee for personal services provided by the employee...whether termed “wages,” “salary,” “commission,” or otherwise. C.C.P. § 706.011(a). Vacation or sick pay is subject to withholding as it is received by the employee.
Every employer, private of public is covered under the Act.
For purposes of the Wage Garnishment Law, an employee is any individual who performed 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. C.C.P. § 706.011(b)(c) See In re: Carter (9th Cir. 1999) 182 F 3d 1027, 1031 - “actual” control of an employee’s performance not required for purposes of section 706.011. It follows that the Wage Garnishment Law does not apply to self-employed debtors. See Moses v. DeVersecy (1984) 157 Cal. App. 3d, 1071, 1073.
Priority of Wage Deductions
A wage deduction order takes priority over subsequent wage deduction orders, wage assignments and federal and state tax liens and levies. Child support orders and spousal support orders, however, take priority over wage deduction orders, regardless of when they are entered. Social Security benefits can never be garnished.
The Wage Deduction Process
An Earnings Withholding Order may be obtained by filing an application, the original Writ of Execution and the required fee with the sheriff (not the court) in the County where the Order is to be served. The creditor need not provide the sheriff with separate written instructions. C.C.P. § 706.102(a). The application must be filed on the official Application for Earnings Withhold or Order form, and include the following:
- Names and Addresses
- Information re Judgment
- Whether this is a support judgment
- Special levying instructions
- Whether this is a subsequent withholding order
The Earnings Withholding Order must be promptly issued by the sheriff following the judgment creditor’s application. C.C.P. § 706.102(a). In most cases, the sheriff completes and signs the order using the information on the application and Writ of Execution.
The Earnings Withholding Order is then served on the employer within 180 days following the issuance of a Writ of Execution. C.C.P. § 699.530(b), 706.103(c), and 706.108(c). Service on the employer may be made by the sheriff or registered process server.
Upon receipt of the summons, the employer must determine the amount to be withheld from the employee’s paycheck and deduct the proper amount from the employee’s pay until the amount of the wage deduction order is satisfied. This amount is generally 25% of the debtor's net disposable earnings (but exceptions are made for low income earners, and any income debtor can request the court to reduce the percentage for good cause). Once the levy has been served on the employer by the sheriff or marshal, it remains in effect until the judgment has been paid in full. Because California is a community property state, the wages of a non-judgment debtor spouse are also subject to levy.
The employer must execute the “Employer’s Return” under penalty of perjury and mail it to the sheriff with 15 days of the date of service.
If the employee questions the creditor’s right to garnish his or her wages, the employee’s only recourse is to the court. In the interim, the employer is required to obey the court order and continue the deduction.
Effect of Failure to Comply
An employer may be held in contempt of court if it fails to deliver copies of the Employer’s Return. The employer may be held liable to the creditor for the employee’s debt for failure to comply with a wage deduction order, withhold or turn said proceeds over to the sheriff.
After receiving her a B.S. in Finance and her J.D. from the University of San Francisco in 1988, Catherine Robertson has provided collection, bankruptcy and pre-judgment remedy solutions for the clients of Pahl & McCay. She is a partner at Pahl & McCay, and has been rated A-V (highest professional and ethical rating) by Martindale-Hubbell. Should you require expertise or assistance in collecting an outstanding obligation, please consider Pahl & McCay.