BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 1775|
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THIRD READING
Bill No: AB 1775
Author: Wieckowski (D)
Amended: 6/21/12 in Senate
Vote: 21
SENATE JUDICIARY COMMITTEE : 4-1, 6/19/12
AYES: Evans, Blakeslee, Corbett, Leno
NOES: Harman
ASSEMBLY FLOOR : 46-25, 4/23/12 - See last page for vote
SUBJECT : Wage levy under an earnings withholding order:
exempt
earnings
SOURCE : Western Center on Law and Poverty
DIGEST : This bill raises the minimum floor of a judgment
debtor's wages that are exempt from levy under an earnings
withholding order from 30 times the federal minimum hourly
wage to 40 times the California minimum hourly wage. This
bill becomes operative on July 1, 2013.
ANALYSIS : Existing law, the Wage Garnishment Law,
establishes procedures regarding the garnishment of a
judgment debtor's wages. (Code of Civil Procedures (CCP)
Section 706.010 et seq.)
Existing law provides an exemption of the amount of
earnings of a judgment debtor that may be garnished to the
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amount provided under federal law. (CCP Section 706.050)
Existing law provides that "earnings" means compensation
payable by an employer to an employee for personal services
performed by such employee, whether denominated as wages,
salary, commission, bonus, or otherwise. (CCP Section
706.011(a)) Existing law does not define "disposable
earnings."
Existing federal law provides that "earnings" means
compensation paid or payable for personal services, whether
denominated as wages, salary, commission, bonus, or
otherwise, and includes periodic payments pursuant to a
pension or retirement program. (15 U.S.C.S. Section
1672(a))
Existing federal law provides that "disposable earnings"
means that part of an employee's earnings remaining after
the deduction from those earnings of any amounts required
by law to be withheld. (15 U.S.C.S. Section 1672(b))
Existing federal law restricts the amount of disposable
earnings of a judgment debtor that may be garnished for any
workweek to 25% of the judgment debtor's disposable
earnings for that week or the amount by which the judgment
debtor's disposable earnings for that week exceeds 30 times
the federal minimum hourly wage, as prescribed by the Fair
Labor Standards Act of 1938, in effect at the time the
earnings are payable, whichever is less. (15 U.S.C.S.
Section 1673)
Existing law exempts from garnishment the portion of the
judgment debtor's wages proven to be necessary for the
support of the judgment debtor or the judgment debtor's
family supported in whole or in part by the judgment
debtor. Existing law provides that this exemption is not
available for debt incurred relating to the payment of
attorney's fees under the Family Code, as specified, for
debt incurred for personal services rendered by an employee
or former employee of the judgment debtor, for debt
relating to a child support order, as specified, or for
debt relating to a state tax order. (CCP Section 706.051)
This bill provides that "disposable earnings" means the
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portion of an individual's earnings that remains after
deducting all amounts required to be withheld by law.
This bill restricts the amount of levy under an earnings
withholding order of a judgment debtor's disposable
earnings for any workweek to the lesser of 25% of the
individual's disposable earnings for that week or the
amount by which the individual's disposable earnings for
that week exceed 40 times the state minimum hourly wage in
effect at the time the earnings are payable.
This bill provides multipliers to determine the maximum
amount of disposable earnings subject to levy under an
earnings order for daily, biweekly, semimonthly, and
monthly pay periods.
This bill provides a delayed operative date of July 1,
2013, so that the Judicial Council of California can revise
the methods of computation provided in wage levy under an
earnings order instructions to employers.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 6/21/12)
Western Center on Law and Poverty (source)
AFSCME
California Advocates for California Labor Federation,
AFL-CIO
Central California Legal Services, Inc.
Inland Empire Latino Lawyers Association, Inc.
Legal Services of Northern California
Public Counsel
Public Law Center
Yuba Sutter Legal Center for Seniors
OPPOSITION : (Verified 6/21/12)
California Association of Collectors
California Bankers Association
California Chamber of Commerce
California Retailers Association
USCB, Inc.
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ARGUMENTS IN SUPPORT : The author writes, "When someone
falls behind on a consumer debt, the judgment creditor may,
and nearly always will, garnish the wages of a worker until
the debt (plus accruing interest) is satisfied. But
existing California law only protects $217.50 per week from
wage garnishment. The working poor, who live
paycheck-to-paycheck, simply cannot make ends meet on this
miniscule amount. When their wages are garnished, other
essentials - rent, food, medicine - become unaffordable.
They lose their homes, their children go hungry, and they
and their families fall ill, or else they fall into further
debt to credit card companies or predatory lenders. All of
these problems have been exacerbated by the financial
crisis, which has stripped families of their meager assets
and decimated the safety net. The alternatives -
bankruptcy or a claim of exemption - are problematic.
Bankruptcy may ensure that no creditor is repaid.
Obtaining a Claim of Exemption can take months."
The Western Center on Law and Poverty, the sponsor of this
bill, writes:
Wage garnishments have enormous impacts on low income
families. In one case from a Central Valley legal
service program, a cannery worker had his wages
garnished due to unpaid medical bills. Once his wages
were garnished, he couldn't pay his auto loan. So his
car was repossessed. And without a car, he couldn't
get to work and lost his job. This should not happen.
We also know that there is serious concern about the
practices of debt collection companies, particularly
third party debt collectors. One legal service program
found that the statute of limitations had expired in
half of the debt cases of its clients. We also know
that many cases filed have inaccurate payment
histories, incorrect social security numbers and
misidentifications. Lastly, most wage garnishments are
derived from default judgments in which the defendant
did not appear or did not have adequate notice.
Under current law debt collectors can garnish the wage
of families who have disposable incomes above $217 a
week or $942 a month. A salary at this level
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represents just 49 Ýpercent] of the federal poverty
level for a family of four. In most communities in
California this income level is insufficient to pay the
Fair Market Rent for a two bedroom apartment. When
food, utilities, insurance, clothing and other
necessities are added in it is obvious that families at
this income level do not have any disposable income to
be garnished.
ARGUMENTS IN OPPOSITION : A coalition of opponents to
this bill argue that it is premature to further modify wage
garnishment exemptions until the impacts of AB 1388
(Wieckowski), Chapter 694, Statutes of 2011, are
understood. AB 1388 deletes the exception from the wage
garnishment exemption for common necessaries of life and
instead provided an exception for wages necessary for the
support of the judgment debtor and his or her family. AB
1388 also adds the exception for debt incurred pursuant to
an order or award for the payment of attorney's fees under
specified sections of the Family Code.
The California Association of Collectors argues that AB
1388 "added undue restrictions on the ability to collect on
judgments based on necessaries, thus limiting a creditor's
ability to be reimbursed for ? those services extended to
consumers on credit terms that were previously a priority
over non-necessaries." Opponents argue that this bill
further exempts even more of a debtor's income from
garnishment and will make it more difficult for creditors
to collect on lawfully owed debts.
ASSEMBLY FLOOR : 46-25, 4/23/12
AYES: Alejo, Allen, Ammiano, Atkins, Beall, Block,
Blumenfield, Bonilla, Bradford, Buchanan, Butler, Campos,
Carter, Chesbro, Dickinson, Eng, Feuer, Fong, Fuentes,
Galgiani, Gatto, Gordon, Hall, Hayashi, Roger Hernández,
Hill, Huber, Hueso, Huffman, Lara, Bonnie Lowenthal, Ma,
Mendoza, Mitchell, Monning, Pan, Perea, V. Manuel Pérez,
Portantino, Skinner, Swanson, Torres, Wieckowski,
Williams, Yamada, John A. Pérez
NOES: Achadjian, Bill Berryhill, Conway, Cook, Donnelly,
Beth Gaines, Garrick, Gorell, Grove, Hagman, Halderman,
Harkey, Jeffries, Jones, Knight, Logue, Mansoor, Miller,
Morrell, Nielsen, Norby, Olsen, Silva, Valadao, Wagner
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NO VOTE RECORDED: Brownley, Charles Calderon, Cedillo,
Davis, Fletcher, Furutani, Nestande, Smyth, Solorio
RJG:dk 6/21/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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