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6000 - Consumer Protection


TITLE III—RESTRICTION ON GARNISHMENT

Sec.

301. Congressional findings and declaration of purpose.
302. Definitions.
303. Restriction on garnishment.
304. Restriction on discharge from employment by reason of garnishment.
305. Exemption for State-regulated garnishments.
306. Enforcement by Secretary of Labor.
307. Effect on State laws.

§ 301.  Congressional findings and declaration of purpose

(a)  DISADVANTAGES OF GARNISHMENT.--The Congress finds:

(1) The unrestricted garnishment of compensation due for personal services encourages the making of predatory extensions of credit. Such extensions of credit divert money into excessive credit payments and thereby hinder the production and flow of goods in interstate commerce.

(2)  The application of garnishment as a creditors' remedy frequently results in loss of employment by the debtor, and the resulting disruption of employment, production, and consumption constitutes a substantial burden on interstate commerce.

(3)  The great disparities among the laws of the several States relating to garnishment have, in effect, destroyed the uniformity of the bankruptcy laws and frustrated the purposes thereof in many areas of the country.

(b)  On the basis of the findings stated in subsection (a) of this section, the Congress determines that the provisions of this title are necessary and proper for the purpose of carrying into execution the powers of the Congress to regulate commerce and to establish uniform bankruptcy laws.

[Codified to 15 U.S.C. 1671]

[Source:  Section 301 of title III of the Act of May 29, 1968 (Pub. L. No. 90-321; 82 Stat. 163), effective July 1, 1970]

§ 302.  Definitions.

For the purposes of this title:

(a)  The term "earnings" means compensation paid or payable for personal services, whether denominated as wages, salary, commission, bonus, or otherwise, and includes periodic payments pursuant to a pension or retirement program.

(b)  The term "disposable earnings" means that part of the earnings of any individual remaining after the deduction from those earnings of any amounts required by law to be withheld.

(c)  The term "garnishment" means any legal or equitable procedure through which the earnings of any individual are required to be withheld for payment of any debt.

[Codified to 15 U.S.C. 1672]

[Source:  Section 302 of title III of the Act of May 29, 1968 (Pub. L. No. 90-321; 82 Stat. 163), effective July 1, 1970]

§ 303.  Restriction on garnishment

(a)  Except as provided in subsection (b) and in section 305, the maximum part of the aggregate disposable earnings of an individual for any workweek which is subjected to garnishment may not exceed

(1)  25 per centum of his disposable earnings for that week, or

(2)  the amount by which his disposable earnings for that week exceed thirty times the Federal minimum hourly wage prescribed by section 6(a)(1) of the Fair Labor Standards Act of 1938 in effect at the time the earnings are payable, whichever is less. In the case of earnings for any pay period other than a week, the Secretary of Labor shall by regulation prescribe a multiple of the Federal minimum hourly wage equivalent in effect to that set forth in paragraph (2).

(b)(1)  The restrictions of subsection (a) do not apply in the case of

(A)  any order for the support of any person issued by a court of competent jurisdiction or in accordance with an administrative procedure, which is established by State law, which affords substantial due process, and which is subject to judicial review.

(B)  any order of any court of the United States having jurisdiction over cases under chapter 13 of title 11 of the United States Code.

(C)  any debt due for any State or Federal tax.

(2)  The maximum part of the aggregate disposable earnings of an individual for any workweek which is subject to garnishment to enforce any order for the support of any person shall not exceed--

(A)  where such individual is supporting his spouse or dependent child (other than a spouse or child with respect to whose support such order is used), 50 per centum of such individual's disposable earnings for that week; and

(B)  where such individual is not supporting such a spouse or dependent child described in clause (A), 60 per centum of such individual's disposable earnings for that week;

except that, with respect to the disposable earnings of any individual for any workweek, the 50 per centum specified in clause (A) shall be deemed to be 55 per centum and the 60 per centum specified in clause (B) shall be deemed to be 65 per centum, if and to the extent that such earnings are subject to garnishment to enforce a support order with respect to a period which is prior to the twelve-week period which ends with the beginning of such workweek.

(c)  No court of the United States or any State, and no State (or officer or agency thereof), may make, execute, or enforce any order or process in violation of this section.

[Codified to 15 U.S.C. 1673]

[Source:  Section 303 of title III of the Act of May 29, 1968 (Pub. L. No. 90-321; 82 Stat. 163), effective July 1, 1970, as amended by section 501(e)(1), (2), and (3) of title V of the Act of May 23, 1977 (Pub. L. No. 95-30; 91 Stat. 161, 162) effective June 1, 1977; and section 312(a) of title III of the Act of November 6, 1978 (Pub. L. No. 95-598; 92 Stat. 2676), effective October 1, 1979]

§ 304.  Restriction on discharge from employment by reason of garnishment

(a)  No employer may discharge any employee by reason of the fact that his earnings have been subjected to garnishment for any one indebtedness.

(b)  Whoever willfully violates subsection (a) of this section shall be fined not more than $1,000, or imprisoned not more than one year, or both.

[Codified to 15 U.S.C. 1674]

[Source:  Section 304 of title III of the Act of May 29, 1968 (Pub. L. No. 90-321; 82 Stat. 163), effective July 1, 1970]

§ 305.  Exemption for State-regulated garnishments

The Secretary of Labor may by regulation exempt from the provisions of section 303(a) and (b)(2) garnishments issued under the laws of any State if he determines that the laws of that State provide restrictions on garnishment which are substantially similar to those provided in section 303(a) and (b)(2).

[Codified to 15 U.S.C. 1675]

[Source:  Section 305 of title III of the Act of May 29, 1968 (Pub. L. No. 90-321; 82 Stat. 164), effective July 1, 1970, as amended by section 501(e)(4) of title V of the Act of May 23, 1977 (Pub. L. No. 95-30; 91 Stat. 162), effective June 1, 1977]

§ 306.  Enforcement by Secretary of Labor

The Secretary of Labor, acting through the Wage and Hour Division of the Department of Labor, shall enforce the provisions of this title.

[Codified to 15 U.S.C. 1676]

[Source:  Section 306 of title III of the Act of May 29, 1968 (Pub. L. No. 90-321; 82 Stat. 164), effective July 1, 1970]

§ 307.  Effect on State laws

This title does not annul, alter, or affect, or exempt any person from complying with, the laws of any State

(1)  prohibiting garnishments or providing for more limited garnishments than are allowed under this title, or

(2)  prohibiting the discharge of any employee by reason of the fact that his earnings have been subjected to garnishment for more than one indebtedness.

[Codified to 15 U.S.C. 1677]

[Source:  Section 307 of title III of the Act of May 29, 1968 (Pub. L. No. 90-321; 82 Stat. 164), effective July 1, 1970]


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