BILL ANALYSIS �
AB 1775
Page 1
Date of Hearing: April 10, 2012
ASSEMBLY COMMITTEE ON JUDICIARY
Mike Feuer, Chair
AB 1775 (Wieckowski) - As Introduced: February 17, 2012
As Proposed to Be Amended
SUBJECT : WAGE GARNISHMENT: EXEMPT EARNINGS
KEY ISSUE : SHOULD A GREATER AMOUNT OF A PERSON'S WEEKLY WAGE
EARNINGS BE PROTECTED FROM WAGE GARNISHMENT TO SATISFY A
JUDGMENT DEBT THAN IS CURRENTLY PROTECTED UNDER CALIFORNIA LAW,
WHICH CURRENTLY MIRRORS THE FEDERAL RULE FOR CALCULATING THE
AMOUNT EXEMPT FROM GARNISHMENT?
FISCAL EFFECT : As currently in print this bill is keyed
non-fiscal.
SYNOPSIS
This bill, sponsored by the Western Center on Law and Poverty,
seeks to increase the so-called "garnishment floor" in
California-that is, to increase the minimum amount of a judgment
debtor's weekly earnings that are exempt from wage garnishment
as a matter of law. Currently, California law conforms with
federal law, 15 U.S.C. � 1673(a), in establishing this amount at
30 times the federal minimum wage. As proposed to be amended,
this bill would break lockstep with federal law and increase
this amount in California law to 40 times the California minimum
wage. Because the current federal minimum wage is $7.25/hour
and the current California minimum wage is $8.00/hour, this bill
would effectively increase the garnishment floor in California
from $217.50 (i.e. 30 x $7.25) to $320 (i.e. 40 x $8.00).
According to the author, the working poor in California simply
cannot make ends meet if their wages are garnished to satisfy a
consumer debt because existing law only protects $217.50 per
week from wage garnishment. This bill is opposed by the
California Association of Collectors, who contend that it
unacceptably allows debtors to avoid paying creditors for goods
or services already rendered, in cases where a court has already
issued a judgment to satisfy a valid debt.
SUMMARY : Increases the amount of a judgment debtor's weekly
earnings that are exempt from wage garnishment from 30 times the
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federal minimum wage to 40 times the California minimum wage.
Specifically, this bill :
1)Provides that the maximum amount of disposable earnings of a
judgment debtor for any work week that is subject to
garnishment shall not exceed the lesser of the following
amounts:
a) Twenty-five percent of the individual's disposable
earnings for that week, or
b) 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.
2)Defines "disposable earnings" as the portion of an
individual's earnings that remains after deducting all amounts
required to be withheld by law.
3)Specifies the multipliers to be used to determine the maximum
amounts of disposable earnings subject to garnishment that are
proportionally equivalent for pay periods of different
intervals, other than a weekly pay period, and requires the
Judicial Council to provide instructions on how to compute
these amounts in the Employer's Instructions document required
under existing law.
EXISTING LAW :
1)Provides that the amount of earnings of a judgment debtor
exempt from the levy of an earnings withholding order, except
as specified, shall be that amount that may not be withheld
from the judgment debtor's earnings under federal law in
Section 1673(a) of Title 15 of the United States Code. (Code
of Civil Procedure Section 706.050. Unless stated otherwise,
all further statutory references are to this code.)
2)Provides that the maximum part of the aggregate disposable
earnings of an individual for any work week which is subject
to garnishment may not exceed 25 per centum of his disposable
earnings for that week, or the amount by which his disposable
earnings for that week exceed thirty times the Federal minimum
hourly wage in effect at the time the earnings are payable,
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whichever is less. (15 U.S.C. � 1673.)
3)Exempts from levy, except as provided, the portion of a
judgment debtor's earnings which the judgment debtor proves is
necessary for the support of the judgment debtor or his or her
family supported in whole or in part by the judgment debtor.
(Section 706.051(b).)
4)Provides that the above exemption is not available if any of
the following exceptions applies:
a) The debt was incurred pursuant to an order or award for
the payment of attorney's fees under Section 2030, 3121, or
3557 of the Family Code.
b) The debt was incurred for personal services rendered by
an employee or former employee of the judgment debtor.
c) The order is a withholding order for support to collect
delinquent amounts payable under a judgment for the support
of a child, or spouse or former spouse, of the judgment
debtor.
d) The order is a state tax order, governed by Article 4
(commencing with Civil Code of Procedure (CCP) Section
706.070). (Code of Civil Procedure Section 706.051(c).)
COMMENTS : This bill, sponsored by the Western Center on Law and
Poverty, seeks to increase the so-called "garnishment floor" in
California-that is, to increase the minimum amount of a judgment
debtor's weekly earnings that are exempt from wage garnishment
as a matter of law. Currently, California law conforms with
federal law, 15 U.S.C. � 1673(a), in establishing this amount at
30 times the federal minimum wage. As proposed to be amended,
this bill would break lockstep with federal law and increase
this amount in California law to 40 times the California minimum
wage. Because the current federal minimum wage is $7.25/hour
and the current California minimum wage is $8.00/hour, this bill
would effectively increase the garnishment floor in California
from $217.50 (i.e. 30 x $7.25) to $320 (i.e. 40 x $8.00).
Need for the Bill. According to the author, the working poor in
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California simply cannot make ends meet if their wages are
garnished to satisfy a consumer debt because existing law only
protects $217.50 per week from wage garnishment. The author
states: "In nearly every county in California, $217.50 a week is
not even considered a living wage for a single adult without
children. AB 1775 modestly raises the garnishment floor with
the result being that the first $320 of a person's weekly wages
is exempt from garnishment. This reasonable increase is still
below what is considered a living wage for a single Californian,
but for a family trying to survive on a minimum wage salary, it
could mean the ability to cover both groceries and medicine, or
both rent and clothing."
As Proposed to Be Amended, This Bill Maintains a Proportionally
Equivalent Formula for Determining the Amount of Earnings to be
Withheld. Under existing law, the first 30 hours of a person's
federal minimum wage earnings (currently at $7.25/hour) are
exempt from garnishment. As proposed to be amended, this bill
applies the California minimum wage instead (currently
$8.00/hour) and exempts the first 40 hours of wage earnings.
Under existing law, the creditor may garnish either the entire
amount of weekly earnings between the floor ($217.50) and 40
times the federal minimum wage ($290), or a maximum of 25% of
the earnings if they exceed the $290 figure-whichever amount is
less. Although this bill would raise the garnishment floor, as
proposed to be amended, the bill preserves the proportionately
equivalent formula for determining the amount to be withheld-all
arising from using the new garnishment floor of $320 in the
appropriate calculations.
The existing "Employer Instructions" form (Judicial Council form
WG-002) contains a table that is intended to help employers
determine the correct amount of earnings to withhold based on
the amount of disposable earnings and the length of the employee
pay period. For reference, the author has generated an updated
version of the table that reflects the newly calculated amounts
that would become effective if this bill were to become law, as
proposed to be amended.
TABLE 1: California minimum wage: $8.00 per hour
-------------------------------------------------------------
| PAY | Daily | Weekly | Every | Twice a | Monthly |
| PERIOD | | | Two | Month | |
| | | | Weeks | | |
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|----------+----------+---------+---------+---------+---------|
|DISPOSABLE|$0 - $320 | $0 - | $0 - | $0 - | $0 - |
| EARNINGS | | $320 | $640 | $693.33 |$1386.67 |
|----------+----------+---------+---------+---------+---------|
|WITHHOLD | None | None | None | None | None |
|----------+----------+---------+---------+---------+---------|
|DISPOSABLE| $320.01 | $320.01 | $640.01 | $693.34 |$1386.68 |
| EARNINGS | -$426.67 | - | - | - | - |
| | | $426.67 | $853.01 | $924.44 |$1848.89 |
|----------+----------+---------+---------+---------+---------|
|WITHHOLD | Amount | Amount | Amount | Amount | Amount |
| | above | above | above | above | above |
| | $320 | $320 | $640 | $693.33 |$1386.67 |
|----------+----------+---------+---------+---------+---------|
|DISPOSABLE| $426.68 | $426.68 | $853.02 | $924.45 |$1848.90 |
| EARNINGS | or more | or more | or more | or more | or more |
|----------+----------+---------+---------+---------+---------|
|WITHHOLD | Maximum | Maximum | Maximum | Maximum | Maximum |
| |of 25% of | of 25% | of 25% | of 25% | of 25% |
| |Disposable| of | of | of | of |
| | Earnings |Disposabl|Disposabl|Disposabl|Disposabl|
| | | e | e | e | e |
| | |Earnings |Earnings |Earnings |Earnings |
-------------------------------------------------------------
As Proposed to Be Amended, This Bill Contains Technical
Amendments to Allow it to Stand Alone from Federal Code and to
Delay Implementation until July 1, 2013. Because existing
California law incorporates by reference the federal rule and
formula for calculating earnings to be withheld, it is necessary
to introduce certain technical amendments into California law to
allow the proposed new rule to stand on its own. As proposed to
be amended, this bill accomplishes this by adopting the federal
definition of "disposable earnings" and by specifying the
mathematical multipliers that are used to calculate equivalent
amounts when converting weekly earnings into equivalent figures
for pay periods other than every week.
Finally, at the request of Judicial Council, this bill would
delay operation of these provisions until July 1, 2013 in order
to give the Council more time to update all relevant wage
garnishment forms.
ARGUMENTS IN OPPOSITION : The California Association of
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Collectors (CAC) writes in opposition: "This bill is premature .
. . and undermines the fundamental principles of personal
responsibility, and also undermines the business community's
ability to provide credit for goods and services by removing
important tools necessary to enforcement legitimate and
undisputed financial obligations." CAC contends that this bill
is premature because last year's AB 1388 by the same author,
which created a new categorical claim for exemption from medical
debt, has not been in effect long enough yet to determine its
impact upon garnishment outcomes. CAC also asserts its
long-standing position that exemptions from wage garnishment are
bad public policy because they simply allow debtors to avoid
paying creditors for goods or services already rendered, in
cases where a court has already issued a judgment to satisfy a
valid debt.
Prior Related Legislation . AB 1388 (Wieckowski), Chapter 694,
Stats. of 2011, allows the court to grant a judgment debtor's
claim of exemption from wage garnishment in cases where the
underlying debt was incurred for medical care or hospital
services rendered to the judgment debtor or his or her family.
AB 1321 (Wieckowski) of 2011 would have allowed a debtor to
obtain a temporary stay on wage garnishment for the period
between the filing of a claim of exemption and the hearing date
for the court to enter judgment on the claim. That bill died in
Assembly Appropriations.
REGISTERED SUPPORT / OPPOSITION :
Support
American Federation of State, County and Municipal Employees
(AFSCME)
California Labor Federation
California Advocates for Nursing Home Reform (CANHR)
Public Law Center
Western Center on Law and Poverty (WCLP)
Opposition
California Association of Collectors
USCB, Inc.
Analysis Prepared by : Anthony Lew / JUD. / (916) 319-2334
AB 1775
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