Senate Bill No. 501

Introduced by Senator Wieckowski

February 26, 2015

An act to amend Sections 706.050 and 706.121 of, and to add Sections 706.053 and 706.130 to, the Code of Civil Procedure, relating to wage garnishment.

LEGISLATIVE COUNSEL’S DIGEST

SB 501, as introduced, Wieckowski. Wage garnishment restrictions: student loans.

The Wage Garnishment Law prescribes the procedure for withholding an employee’s earnings for purposes of paying a debt. The law requires that a levy of execution upon the earnings of an employee be made by service of an earnings withholding order upon the employer. An earnings withholding order is issued by a levying officer upon receiving an application submitted by a judgment creditor, as specified. Existing law prohibits the amount of an individual judgment debtor’s weekly disposable earnings subject to levy under an earnings withholding order from exceeding the lesser of 25% of the individual’s weekly disposable earnings or the amount by which the individual’s disposable earnings for the week exceed 40 times the state minimum hourly wage in effect at the time the earnings are payable, unless an exception applies. An employer is required, except as otherwise provided by statute, to withhold the amounts required by an earnings withholding order from all earnings of the employee payable for any pay period of the employee which ends during the withholding period.

This bill would provide that an earnings withholding order shall not be used for purposes of enforcing a judgment for the collection of debt that is from a student loan that is not made, insured, or guaranteed by the United States government pursuant to the Federal Family Education Loan Program or the William D. Ford Federal Direct Loan Program. The bill would also reduce the prohibited amount of an individual judgment debtor’s weekly disposable earnings subject to levy under an earnings withholding order from exceeding the lesser of 10% of the individual’s weekly disposable earnings or 1⁄3 of the amount by which the individual’s disposable earnings for the week exceed 40 times the state minimum hourly wage in effect at the time the earnings are payable. The bill would further require a court to terminate or modify an earnings withholding order issued on or after July 1, 2016, if the court determines, upon a request by the judgment debtor pursuant to specified requirements and procedures, that the withholding order enforces a judgment in violation of these provisions. The bill would provide that a judgment creditor is liable to the judgment debtor for all amounts collected by the judgment creditor in violation of these provisions. The bill also would make conforming changes.

Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

Section 706.050 of the Code of Civil Procedure
is amended to read:

706.050.  

(a) Except as otherwise provided in this chapter, the
maximum amount of disposable earnings of an individual judgment
debtor for any workweek that is subject to levy under an earnings
withholding order shall not exceed the lesser of the following:

(1)  begin delete Twenty-five end delete begin insert Ten end insert percent of the individual’s disposable
earnings for that week.

(2)  begin delete The end delete begin insert One end insert begin insert -third of the end insert 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.

(b) For any pay period other than weekly, the following
multipliers shall be used to determine the maximum amount of
disposable earnings subject to levy under an earnings withholding
order that is proportional in effect to the calculation described in
paragraph (2) of subdivision (a), except as specified in paragraph
(1):

(1) For a daily pay period, the amounts shall be identical to the
amounts described in subdivision (a).

(2) For a biweekly pay period, multiply the state hourly
minimum wage by 80 work hours.

(3) For a semimonthly pay period, multiply the state hourly
minimum wage by 862⁄3 work hours.

(4) For a monthly pay period, multiply the state hourly minimum
wage by 1731⁄3 work hours.

SEC. 2.  

Section 706.053 is added to the Code of Civil
Procedure, to read:

706.053.  

(a) An earnings withholding order shall not be used
for purposes of enforcing a judgment for the collection of debt that
the judgment debtor proves is from a student loan that is not made,
insured, or guaranteed by the United States government pursuant
to the Federal Family Education Loan Program (20 U.S.C. Sec.
1071 et seq.) or the William D. Ford Federal Direct Loan Program
(34 C.F.R. 685.100).

(b) An earnings withholding order issued on or after July 1,
2016, shall be terminated or modified if it enforces a judgment in
violation of this section.

(c) A judgment debtor may make a request to terminate an
earnings withholding order enforcing a judgment for student loan
debt pursuant to Section 706.130.

(d) A judgment creditor is liable to the judgment debtor for all
amounts collected by the judgment creditor in violation of this
section.

SEC. 3.  

Section 706.121 of the Code of Civil Procedure is
amended to read:

706.121.  

The “application for issuance of earnings withholding
order” shall be executed under oath and shall include all of the
following:

(a) The name, the last known address, and, if known, the social
security number of the judgment debtor.

(b) The name and address of the judgment creditor.

(c) The court where the judgment was entered and the date the
judgment was entered.

(d) Whether the judgment is based in whole or in part on a claim
for elder or dependent adult financial abuse and, if in part, how
much of the judgment arises from that claim.

begin insert

(e) Commencing July 1, 2016, whether the judgment is based
in whole or in part on a claim for debt from a student loan that is
not made, insured, or guaranteed by the United States government
pursuant to the Federal Family Education Loan Program (20
U.S.C. Sec. 1071 et seq.) or the William D. Ford Federal Direct
Loan Program (34 C.F.R. 685.100).

end insert begin delete

(e)

end delete

begin insert (f) end insert  The date of issuance of a writ of execution to the county
where the earnings withholding order is sought.

begin delete

(f)

end delete

begin insert (g) end insert  The total amount required to satisfy the order on the date of
issuance (which may not exceed the amount required to satisfy the
writ of execution on the date of issuance of the order plus the
levying officer’s statutory fee for service of the order).

begin delete

(g)

end delete

begin insert (h) end insert  The name and address of the employer to whom the order
will be directed.

begin delete

(h)

end delete

begin insert (i) end insert  The name and address of the person to whom the withheld
money is to be paid by the levying officer.

SEC. 4.  

Section 706.130 is added to the Code of Civil
Procedure, to read:

706.130.  

(a) The “request to terminate an earnings withholding
order enforcing a judgment for student loan debt” shall include all
of the following information, if known:

(1) The current mailing address of the judgment debtor.

(2) The name and address of the judgment creditor.

(3) The court in which the judgment was entered and the date
the judgment was entered.

(4) A statement, under penalty of perjury, of whether the
judgment is based in whole or in part on a claim for a student loan
that is not made, insured, or guaranteed by the United States
government pursuant to the Federal Family Education Loan
Program (20 U.S.C. Sec. 1071 et seq.) or the William D. Ford
Federal Direct Loan Program (34 C.F.R. 685.100). Documents
supporting the existence of the student loan debt shall be attached
to the request.

(5) Whether an earnings withholding order was issued in
violation of Section 706.053. A copy of the order shall be attached
to the request.

(6) The date of issuance of a writ of execution to the county
where the earnings withholding order is sought.

(7) The total amount required to satisfy the earnings withholding
order on the date of issuance.

(8) The name and address of the employer to whom the earnings
withholding order was directed.

(9) The name and address of the person to whom the order
directs the levying officer to pay the money withheld.

(b)  A request to terminate an earnings withholding order
enforcing a judgment for student loan debt shall be made by filing
with the levying officer an original and one copy of the request.

(c) Upon filing of a request, the levying officer shall promptly
send to the judgment creditor, at the address stated in the
application for the earnings withholding order, by first-class mail,
postage prepaid, both of the following:

(1) A copy of the request.

(2) A notice of the request. The notice shall state that the request
has been filed and that the earnings withholding order will be
terminated or modified to subtract from the amount to be withheld
the portion that is based on a judgment to collect a student loan
debt in violation of Section 706.053, unless a notice of opposition
to the request is filed with the levying officer by the judgment
creditor within 10 days after the date of the mailing of the notice
of the request.

(d) A judgment creditor who desires to contest a request to
terminate an earnings withholding order enforcing a judgment for
student loan debt shall, within 10 days after the date of the mailing
of the notice of the request, file with the levying officer a notice
of opposition to the request.

(e) If a notice of opposition to a request is filed with the levying
officer within the 10-day period, the judgment creditor is entitled
to a hearing on the request. If the judgment creditor desires a
hearing on the request, the judgment creditor shall file a notice of
motion for an order determining the request with the court within
10 days after the date the levying officer mailed the notice of claim
of exemption. If the notice of motion is so filed, the hearing on
the motion shall be held not later than 30 days from the date the
notice of motion was filed unless the hearing is continued by the
court for good cause. At the time prescribed by subdivision (b) of
Section 1005, the judgment creditor shall give written notice of
the hearing to the levying officer and shall serve a notice of the
hearing and a copy of the notice of opposition to the request on
the judgment debtor and, if indicated in the request, on the attorney
for the judgment debtor. Service is deemed made when the notice
of the hearing and a copy of the notice of opposition to the request
are deposited in the mail, postage prepaid, addressed to the
judgment debtor at the address stated in the request and, if service
on the attorney for the judgment debtor was indicated in the
request, to the attorney at the address stated in the request. The
judgment creditor shall file proof of the service with the court.
After receiving the notice of the hearing and before the date set
for the hearing, the levying officer shall file the request and the
notice of opposition to the request with the court.

(f) If the levying officer does not receive a notice of opposition
to the request within the 10-day period after the date of mailing
of the notice of request and a notice of the hearing not later than
10 days after the filing of the notice of opposition to the request,
the levying officer shall serve on the employer one of the
following:

(1) A notice that the earnings withholding order has been
terminated if the entire amount to be withheld under the order is
based on a judgment to collect a student loan debt in violation of
Section 706.053.

(2) A modified earnings withholding order that reflects the
subtraction from the amount to be withheld of the portion that is
based on a judgment to collect a student loan debt in violation of
Section 706.053.

(g) If, after hearing, the court orders that the earnings
withholding order be terminated or modified, the clerk shall
promptly transmit a certified copy of the order to the levying officer
who shall promptly serve on the employer of the judgment debtor
(1) a notice that the earnings withholding order has been
terminated, or (2) a copy of the modified earnings withholding
order. The court may order that the earnings withholding order be
terminated as of a date that precedes the date of hearing. If the
court determines that an amount withheld pursuant to the earnings
withholding order should be paid to the judgment debtor, the court
shall make an order directing the person who holds that amount
to pay it promptly to the judgment debtor.

(h) If the earnings withholding order is terminated or modified,
the judgment creditor shall not apply for another earnings
withholding order to enforce the same judgment or the portion
thereof that was determined to be based on a student loan debt in
violation of Section 706.053.

(i) If an employer has withheld and paid over amounts pursuant
to an earnings withholding order after the date of termination of
the order but prior to the receipt of notice of its termination, the
judgment debtor may recover those amounts only from the levying
officer if the levying officer still holds those amounts or, if those
amounts have been paid over to the judgment creditor, from the
judgment creditor. If the employer has withheld amounts pursuant
to an earnings withholding order after termination of the order but
has not paid over those amounts to the levying officer, the employer
shall promptly pay those amounts to the judgment debtor.

(j) An appeal lies from any court order under this section
granting or denying a request to terminate an earnings withholding
order enforcing a judgment for student loan debt. An appeal by
the judgment creditor from an order modifying or terminating the
earnings withholding order shall not stay the order from which the
appeal is taken. Notwithstanding the appeal, until the order
modifying or terminating the earnings withholding order is set
aside or modified on appeal, the order modifying or terminating
the earnings withholding order shall be given the same effect as
if the appeal had not been taken.

(k) This section does not apply to a withholding order for
support or a withholding order for taxes.