190 | Massachusetts Wage & Hour Peculiarities, 2025 ed. © 2025 Seyfarth Shaw LLP Massachusetts exempts from garnishment “the greater of 85 per cent of the [employee’s] gross wages or 50 times the greater of the federal or the Massachusetts hourly minimum wage for each week or portion thereof.”1195 Based on the Massachusetts minimum wage rate at the time of publication (i.e.. $15.00 per hour), this means that either the first $750, or if greater, the first 85 percent of the employee’s wages, is exempt from garnishment. The CCPA is even more complex. First, its protections apply to an individual’s “earnings.”1196 The CCPA defines “earnings” as compensation paid or payable for personal services including net wages, salaries, commissions, bonuses, and periodic payments from a pension or other retirement programs.1197 In determining whether payments are earnings under the CCPA, the central inquiry is whether the employer paid the amount in question for the employee’s services. For employees who receive tips, the cash wages paid to the employee and the amount of tip credit claimed by the employer constitute earnings for purposes of the CCPA.1198 Next, the CCPA limits the earnings vulnerable to garnishment to those deemed “disposable earnings,” which are those wages left over after deducting mandatory withholdings.1199 Employers should only exclude withholdings required by law from the “disposable” amount subject to garnishment.1200 For instance, union dues, health insurance, and retirement plan contributions are not excluded from the employee’s disposable income.1201 After ascertaining the amount of an employee’s disposable earnings, the CCPA requires employers to calculate the maximum allowable garnishment for that income using two different formulas.1202 The garnishment is limited to the smaller of either 25 percent of the week’s disposable earnings, or the amount of weekly pay that exceeds thirty times the federal minimum wage.1203 1195 M.G.L. ch. 246, § 28. 1196 15 U.S.C. § 1672(a); DOL Wage & Hour Fact Sheet #30 (Oct. 2020). Certain types of garnishments are exempt from both state and federal regulations, such that the employee does not receive any of the protections described above. The CCPA does not limit the amount of earnings subject to garnishment for state or federal taxes or in certain types of bankruptcy proceedings. 15 U.S.C. § 1673(b)(1). Other federal statutes impose limits different from the CCPA. For example, under the Debt Collection Improvement Act, federal agencies may garnish only up to 15 percent of disposable earnings to repay defaulted non-tax debts owed to the U.S. government. See 31 U.S.C. § 3720D(b)(1). Similarly, under the Higher Education Act, garnishments are limited to 15 percent of disposable earnings to repay defaulted student loans. See 20 U.S.C. § 1095a(a)(1). 1197 14 U.S.C. § 1672(a). 1198 Id. 1199 Id.; 15 U.S.C. § 1672(b); DOL Wage & Hour Fact Sheet #30 (Oct. 2020) (earnings may also include lump sum and other payments from an employment-based disability plan, profit sharing, referral and sign-on bonuses, moving or relocation incentive payments, service awards, retroactive merit increases, payments for working during a holiday, workers’ compensation payments for wage replacement, severance pay, and back and front pay payments from an insurance settlement). 1200 DOL Wage & Hour Fact Sheet #30 (Oct. 2020) (examples of deductions required by law include federal, state, and local taxes, the employee’s share of Social Security, Medicare and State Unemployment Insurance tax). 1201 Id. 1202 15 U.S.C. § 1673(a). 1203 Id.
RkJQdWJsaXNoZXIy OTkwMTQ4