BILL ANALYSIS �
AB 1775
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CONCURRENCE IN SENATE AMENDMENTS
AB 1775 (Wieckowski)
As Amended June 21, 2012
Majority vote
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|ASSEMBLY: |46-25|(April 23, |SENATE: |22-16|(August 20, |
| | |2012) | | |2012) |
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Original Committee Reference: JUD.
SUMMARY : Increases the amount of a judgment debtor's weekly
earnings that are exempt from levy under an earnings withholding
order 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 levy
under an earnings withholding order 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.
The Senate amendments replace the term "garnishment" with the
equivalent term "levy under an earnings withholding order" in
order to maintain consistency in terminology used throughout the
section of law amended by this bill.
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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
(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.
AS PASSED BY THE ASSEMBLY , this bill was substantially similar
to the version approved by the Senate.
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
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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."
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 | $1,386.67 |
|----------+----------+---------+----------+----------+-----------|
|WITHHOLD | None | None | None | None | None |
|----------+----------+---------+----------+----------+-----------|
|DISPOSABLE|$320.01 - | $320.01 |$640.01 - |$693.34 - | $1,386.68 |
| EARNINGS | $426.67 | - | $853.01 | $924.44 | - |
| | | $426.67 | | | $1,848.89 |
|----------+----------+---------+----------+----------+-----------|
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|WITHHOLD | Amount | Amount | Amount | Amount | Amount |
| | above | above | above | above | above |
| | $320 | $320 | $640 | $693.33 | $1,386.67 |
|----------+----------+---------+----------+----------+-----------|
|DISPOSABLE| $426.68 | $426.68 | $853.02 | $924.45 | $1,848.90 |
| EARNINGS | or more | or more | or more | or more | or more |
|----------+----------+---------+----------+----------+-----------|
|WITHHOLD | Maximum | Maximum | Maximum | Maximum |Maximum of |
| |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: 0004237
AB 1775
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