Amended in Senate April 6, 2015

Senate BillNo. 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 amended, 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 wagebegin insert, or applicable local minimum hourly rate, if higher,end insert in effect at the time the earnings are payable,begin insert as specified,end insert 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 13 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:

P2    1

SECTION 1.  

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

3

706.050.  

(a) Except as otherwise provided in this chapter, the
4maximum amount of disposable earnings of an individual judgment
5debtor for any workweek that is subject to levy under an earnings
6withholding order shall not exceed the lesser of the following:

7(1) Ten percent of the individual’s disposable earnings for that
8week.

9(2) One-third of the amount by which the individual’s disposable
10earnings for that week exceed 40 times the state minimum hourly
11wage in effect at the time the earnings are payable.begin insert If a judgment
12debtor works in a location where the local minimum hourly wage
13is greater than the state minimum hourly wage, the local minimum
14hourly wage in effect at the time the earnings are payable shall
15be used for the calculation made pursuant to this paragraph.end insert

P3    1(b) For any pay period other than weekly, the following
2multipliers shall be used to determine the maximum amount of
3disposable earnings subject to levy under an earnings withholding
4order that is proportional in effect to the calculation described in
5paragraph (2) of subdivision (a), except as specified in paragraph
6(1):

7(1) For a daily pay period, the amounts shall be identical to the
8amounts described in subdivision (a).

9(2) For a biweekly pay period, multiply thebegin delete stateend deletebegin insert applicableend insert
10 hourly minimum wage by 80 work hours.

11(3) For a semimonthly pay period, multiply thebegin delete stateend deletebegin insert applicableend insert
12 hourly minimum wage by 8623 work hours.

13(4) For a monthly pay period, multiply thebegin delete stateend deletebegin insert applicableend insert
14 hourly minimum wage by 17313 work hours.

15

SEC. 2.  

Section 706.053 is added to the Code of Civil
16Procedure
, to read:

17

706.053.  

(a) An earnings withholding order shall not be used
18for purposes of enforcing a judgment for the collection of debt that
19the judgment debtor proves is from a student loan that is not made,
20insured, or guaranteed by the United States government pursuant
21to the Federal Family Education Loan Program (20 U.S.C. Sec.
221071 et seq.) or the William D. Ford Federal Direct Loan Program
23(34 C.F.R. 685.100).

24(b) An earnings withholding order issued on or after July 1,
252016, shall be terminated or modified if it enforces a judgment in
26violation of this section.

27(c) A judgment debtor may make a request to terminate an
28 earnings withholding order enforcing a judgment for student loan
29debt pursuant to Section 706.130.

30(d) A judgment creditor is liable to the judgment debtor for all
31amounts collected by the judgment creditor in violation of this
32section.

33

SEC. 3.  

Section 706.121 of the Code of Civil Procedure is
34amended to read:

35

706.121.  

The “application for issuance of earnings withholding
36order” shall be executed under oath and shall include all of the
37following:

38(a) The name, the last known address, and, if known, the social
39security number of the judgment debtor.

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

P4    1(c) The court where the judgment was entered and the date the
2judgment was entered.

3(d) Whether the judgment is based in whole or in part on a claim
4for elder or dependent adult financial abuse and, if in part, how
5much of the judgment arises from that claim.

6(e) Commencing July 1, 2016, whether the judgment is based
7in whole or in part on a claim for debt from a student loan that is
8not made, insured, or guaranteed by the United States government
9pursuant to the Federal Family Education Loan Program (20 U.S.C.
10Sec. 1071 et seq.) or the William D. Ford Federal Direct Loan
11Program (34 C.F.R. 685.100).

12(f) The date of issuance of a writ of execution to the county
13where the earnings withholding order is sought.

14(g) The total amount required to satisfy the order on the date of
15issuance (which may not exceed the amount required to satisfy the
16writ of execution on the date of issuance of the order plus the
17levying officer’s statutory fee for service of the order).

18(h) The name and address of the employer to whom the order
19will be directed.

20(i) The name and address of the person to whom the withheld
21money is to be paid by the levying officer.

22

SEC. 4.  

Section 706.130 is added to the Code of Civil
23Procedure
, to read:

24

706.130.  

(a) The “request to terminate an earnings withholding
25order enforcing a judgment for student loan debt” shall include all
26of the following information, if known:

27(1) The current mailing address of the judgment debtor.

28(2) The name and address of the judgment creditor.

29(3) The court in which the judgment was entered and the date
30the judgment was entered.

31(4) A statement, under penalty of perjury, of whether the
32judgment is based in whole or in part on a claim for a student loan
33that is not made, insured, or guaranteed by the United States
34government pursuant to the Federal Family Education Loan
35Program (20 U.S.C. Sec. 1071 et seq.) or the William D. Ford
36Federal Direct Loan Program (34 C.F.R. 685.100). Documents
37supporting the existence of the student loan debt shall be attached
38to the request.

P5    1(5) Whether an earnings withholding order was issued in
2violation of Section 706.053. A copy of the order shall be attached
3to the request.

4(6) The date of issuance of a writ of execution to the county
5where the earnings withholding order is sought.

6(7) The total amount required to satisfy the earnings withholding
7order on the date of issuance.

8(8) The name and address of the employer to whom the earnings
9withholding order was directed.

10(9) The name and address of the person to whom the order
11directs the levying officer to pay the money withheld.

12(b)  A request to terminate an earnings withholding order
13enforcing a judgment for student loan debt shall be made by filing
14with the levying officer an original and one copy of the request.

15(c) Upon filing of a request, the levying officer shall promptly
16send to the judgment creditor, at the address stated in the
17application for the earnings withholding order, by first-class mail,
18postage prepaid, both of the following:

19(1) A copy of the request.

20(2) A notice of the request. The notice shall state that the request
21has been filed and that the earnings withholding order will be
22terminated or modified to subtract from the amount to be withheld
23the portion that is based on a judgment to collect a student loan
24debt in violation of Section 706.053, unless a notice of opposition
25to the request is filed with the levying officer by the judgment
26creditor within 10 days after the date of the mailing of the notice
27of the request.

28(d) A judgment creditor who desires to contest a request to
29terminate an earnings withholding order enforcing a judgment for
30student loan debt shall, within 10 days after the date of the mailing
31of the notice of the request, file with the levying officer a notice
32of opposition to the request.

33(e) If a notice of opposition to a request is filed with the levying
34officer within the 10-day period, the judgment creditor is entitled
35to a hearing on the request. If the judgment creditor desires a
36hearing on the request, the judgment creditor shall file a notice of
37motion for an order determining the request with the court within
3810 days after the date the levying officer mailed the notice of claim
39of exemption. If the notice of motion is so filed, the hearing on
40the motion shall be held not later than 30 days from the date the
P6    1notice of motion was filed unless the hearing is continued by the
2court for good cause. At the time prescribed by subdivision (b) of
3Section 1005, the judgment creditor shall give written notice of
4the hearing to the levying officer and shall serve a notice of the
5hearing and a copy of the notice of opposition to the request on
6the judgment debtor and, if indicated in the request, on the attorney
7for the judgment debtor. Service is deemed made when the notice
8of the hearing and a copy of the notice of opposition to the request
9are deposited in the mail, postage prepaid, addressed to the
10judgment debtor at the address stated in the request and, if service
11on the attorney for the judgment debtor was indicated in the
12request, to the attorney at the address stated in the request. The
13judgment creditor shall file proof of the service with the court.
14After receiving the notice of the hearing and before the date set
15for the hearing, the levying officer shall file the request and the
16notice of opposition to the request with the court.

17(f) If the levying officer does not receive a notice of opposition
18to the request within the 10-day period after the date of mailing
19 of the notice of request and a notice of the hearing not later than
2010 days after the filing of the notice of opposition to the request,
21the levying officer shall serve on the employer one of the
22following:

23(1) A notice that the earnings withholding order has been
24terminated if the entire amount to be withheld under the order is
25based on a judgment to collect a student loan debt in violation of
26Section 706.053.

27(2) A modified earnings withholding order that reflects the
28subtraction from the amount to be withheld of the portion that is
29based on a judgment to collect a student loan debt in violation of
30Section 706.053.

31(g) If, after hearing, the court orders that the earnings
32withholding order be terminated or modified, the clerk shall
33promptly transmit a certified copy of the order to the levying officer
34who shall promptly serve on the employer of the judgment debtor
35(1) a notice that the earnings withholding order has been
36terminated, or (2) a copy of the modified earnings withholding
37order. The court may order that the earnings withholding order be
38terminated as of a date that precedes the date of hearing. If the
39court determines that an amount withheld pursuant to the earnings
40withholding order should be paid to the judgment debtor, the court
P7    1shall make an order directing the person who holds that amount
2to pay it promptly to the judgment debtor.

3(h) If the earnings withholding order is terminated or modified,
4the judgment creditor shall not apply for another earnings
5withholding order to enforce the same judgment or the portion
6thereof that was determined to be based on a student loan debt in
7violation of Section 706.053.

8(i) If an employer has withheld and paid over amounts pursuant
9to an earnings withholding order after the date of termination of
10the order but prior to the receipt of notice of its termination, the
11judgment debtor may recover those amounts only from the levying
12officer if the levying officer still holds those amounts or, if those
13amounts have been paid over to the judgment creditor, from the
14judgment creditor. If the employer has withheld amounts pursuant
15to an earnings withholding order after termination of the order but
16has not paid over those amounts to the levying officer, the employer
17shall promptly pay those amounts to the judgment debtor.

18(j) An appeal lies from any court order under this section
19granting or denying a request to terminate an earnings withholding
20order enforcing a judgment for student loan debt. An appeal by
21the judgment creditor from an order modifying or terminating the
22earnings withholding order shall not stay the order from which the
23appeal is taken. Notwithstanding the appeal, until the order
24modifying or terminating the earnings withholding order is set
25aside or modified on appeal, the order modifying or terminating
26the earnings withholding order shall be given the same effect as
27if the appeal had not been taken.

28(k) This section does not apply to a withholding order for
29support or a withholding order for taxes.



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