BILL ANALYSIS �
AB 1775
Page 1
ASSEMBLY THIRD READING
AB 1775 (Wieckowski)
As Amended April 17, 2012
Majority vote
JUDICIARY 7-3
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|Ayes:|Feuer, Atkins, Dickinson, | | |
| |Huber, Monning, | | |
| |Wieckowski, | | |
| |Bonnie Lowenthal | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Wagner, Gorell, Jones | | |
| | | | |
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SUMMARY : Increases the amount of a judgment debtor's weekly
earnings that are exempt from wage garnishment from 30 times the
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 :
AB 1775
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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 (U.S.C.).
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% of his or her disposable earnings
for that week, or the amount by which his or her disposable
earnings for that week exceed 30 times the federal minimum hourly
wage in effect at the time the earnings are payable, whichever is
less.
FISCAL EFFECT : None
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. Section 1673(a), in establishing this amount at 30 times
the federal minimum wage. This bill seeks to 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. 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."
AB 1775
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Under existing law, the first 30 hours of a person's federal minimum
wage earnings (currently at $7.25/hour) are exempt from garnishment.
Instead, 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, 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 table below reflects the updated amounts
that would become effective if this bill were to become law in its
current form.
TABLE 1: California minimum wage: $8.00 per hour
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| PAY | Daily | Weekly |Every Two | Twice a | Monthly |
| PERIOD | | | Weeks | Month | |
|----------+----------+---------+----------+----------+-----------|
|DISPOSABLE|$0 - $320 | $0 - |$0 - $640 | $0 - | $0 - |
| EARNINGS | | $320 | | $693.33 |$1386.67 |
|----------+----------+---------+----------+----------+-----------|
|WITHHOLD | None | None | None | None | None |
|----------+----------+---------+----------+----------+-----------|
|DISPOSABLE|$320.01 - | $320.01 |$640.01 - |$693.34 - |$1386.68 - |
| EARNINGS | $426.67 | - | $853.01 | $924.44 | $1848.89 |
| | | $426.67 | | | |
|----------+----------+---------+----------+----------+-----------|
|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 |
AB 1775
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| |of 25% of | of 25% |of 25% of |of 25% of | 25% of |
| |Disposable| of |Disposable|Disposable|Disposable |
| | Earnings |Disposabl| Earnings | Earnings |Earnings |
| | | e | | | |
| | |Earnings | | | |
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Because existing California law incorporates by reference the
federal rule and formula for calculating earnings to be withheld,
the bill establishes a new California rule to: 1) adopt the federal
definition of "disposable earnings"; and, 2) specify 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 delays
operation of these provisions until July 1, 2013, in order to give
the Council more time to update all relevant wage garnishment forms.
The California Association of 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 enforce legitimate
and undisputed financial obligations." 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.
Analysis Prepared by : Anthony Lew / JUD. / (916) 319-2334
FN: 0003273