Mass-Peculiarities: An Employers Guide to Wage & Hour Law in the Bay State 2022 Edition

142 | Massachusetts Wage & Hour Peculiarities, 2022 ed. © 2022 Seyfarth Shaw LLP situation. As detailed in Section XI.B, when net wages are garnished pursuant to child or spousal support orders, the employee receives less protection under both state and federal law. A. Calculating Garnishments Under Massachusetts Law and the CCPA Under both Massachusetts and federal law, a certain portion of an employee’s wages are exempt from garnishment, although the laws differ on how this exempt amount is calculated. 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.” 830 Based on the Massachusetts minimum wage rate at the time of publication (i.e. $13.50 an hour), this means that either the first $675, 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.” 831 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. 832 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. 833 Next, the CCPA limits the earnings vulnerable to garnishment to those deemed “disposable earnings,” which are those wages left over after deducting mandatory withholdings. 834 Employers should only exclude withholdings required by law from the “disposable” amount subject to garnishment. 835 For instance, union dues, health insurance, and retirement plan contributions are not excluded from the employee’s disposable income. 836 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 830 M.G.L. ch. 246, § 28. 831 15 U.S.C. § 1672(a); DOL Wage & Hour Fact Sheet #30 (Oct . 2020). Certain types of garnishment s are exempt from both state and federal regulat ions, 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 limit s different from the CCPA. For example, under the Debt Collect ion Improvement Act , federal agencies may garnish only up to 15 percent of disposable earnings to repay defaulted non-tax debt s owed to the U.S. government . See 31 U.S.C. § 3720D(b)(1). Similarly, under the Higher Educat ion Act , garnishment s are limited to 15 percent of disposable earnings to repay defaulted student loans. See 20 U.S.C. § 1095a(a)(1). 832 14 U.S.C. § 1672(a). 833 Id . 834 Id. ; 15 U.S.C. § 1672(b); DOL Wage & Hour Fact Sheet #30 (Oct . 2020) (earnings may also include lump sum and other payment s from an employment-based disability plan, profit sharing, referral and sign-on bonuses, moving or relocat ion incent ive payment s, service awards, ret roact ive merit increases, payments for working during a holiday, workers’ compensat ion payment s for wage replacement , severance pay, and back and front pay payment s from an insurance set t lement). 835 DOL Wage & Hour Fact Sheet #30 (Oct . 2020) (examples of deduct ions required by law include federal, state, and local taxes, the employee’s share of Social Security, Medicare and State Unemployment Insurance tax). 836 Id .