Wage Garnishment Amounts Rise With Minimum Wage Increase in 2018 (And Other Wage-Related Changes)
Don’t be surprised when you receive a paycheck with an increased debt collection amount in January, as wage garnishment amounts have risen along with minimum wage increase.
Starting January 1, 2018, California residents have been enjoying a minimum wage increase. Employers across California – and a few other states introducing the wage law changes – are now required to pay their workers at least $10.50 per hour at small companies with 25 or fewer employees, up from $10.
For larger companies, the minimum wage has also increased by $0.50 from $10.50 to $11 per hour.
While the news of minimum wage increase has grabbed national headlines and practically every employer and employee is aware of the wage changes in 2018, only a handful of people realize that the minimum wage increase has also triggered several other wage-related changes.
Today, our best wage garnishment attorneys at Zuckerman Law, L.L.C. are going to outline all consequential changes following the minimum wage increase in 2018.
What’s a wage garnishment and how does it affect you?
Turns out, the increase of minimum pay in California and other states has triggered adjustments to income withholdings. Statutory exemptions from withholdings reduce the amount that may be garnished.
Wage garnishment refers to a debt collection action taken by a creditor, such as the IRS. Wage garnishment is an automatic action applied to every paycheck of the debtor within a specified amount of time and for a specified amount per paycheck to be collected by the creditor.
In 2018, the amount your creditor can deduct from your wages has increased, so don’t be surprised when you receive your first paycheck in January.
Under federal law, a debtor’s minimum disposable earnings must be 30 times the federal minimum wage ($217.5 a week) before a garnishment may be deducted from the paycheck.
However, some states have other minimum disposable earnings thresholds that allow them to deduct a larger wage garnishment amount.
Wage garnishment amounts in California in 2018
In California, the state minimum wage is multiplied by 40 times instead of the federal 30. Wage garnishment relating to the state minimum wage has been adjusted not only in California but also in other states where state minimum wage increased starting January 1.
Given that California’s minimum wage is $11 and $10.50 for employees at larger and smaller firms, respectively, the statutory exemption for creditor garnishments multiply the state minimum wage by 40 times and rise to $440 and $420, from $420 and $400, respectively.
Our Fort Lauderdale wage garnishment attorneys at Zuckerman Law, L.L.C. also warn of other wage-related changes triggered by the minimum wage increase.
Changes to executive, professional overtime exemptions
California’s minimum wage increase has also bumped the salary threshold to qualify as an executive, administrative, or professional employees, who are exempt from overtime.
Under the Fair Labor Standards Act, employees across the U.S. must be compensated on a salary basis for a minimum of $455 per week, or $23,660 annually.
In California, the threshold is twice the state minimum wage for weekly full-time employment of more than 40 hours in a work week. For smaller firms, the minimum salary threshold for overtime-exempt employees is now $840, up from $800 weekly.
For larger companies, the threshold has been adjusted to $880, up from $840 (weekly), according to the state’s minimum wage increase.
Law changes related to taxes, debts, wage garnishment, bank levies, and other complicated terms may be confusing. Being confused by your tax situation can get you in big financial trouble, which is why it’s advised to seek the legal advice of an experienced tax attorney.
Consult our wage garnishment lawyers to find out how the new wage-related law changes will affect you and your family. Call Zuckerman Law, L.L.C. at 954-922-1975 or fill out this contact form to get a free initial consultation.