Employer deducted wrong amounts from wages

Calculating disposable earnings can be a real headache.  But mistakes can lead you to deduct too much or too little from employees’ wages.

Take, for instance, the Southwest Center for the Developmentally Disabled Inc. of Louisville KY.

The Dept. of Labor (DOL) discovered the nonprofit failed to properly calculate staff members’ disposable earnings.

As a result, the employer deducted the wrong amounts for garnishments and child support orders.

That violation of the Consumer Credit Protection Act (CCPA) will cost the employer $1,299, to be paid to three workers.

In addition, due to Fair Labor Standards Act violations involving subminimum wage, the employer will pay $115,497 to 119 workers.

Based on disposable earnings

The amount of income subject to garnishment is based on a worker’s disposable earnings – what’s left after legally required deductions, such as:

Federal, state and local taxes,

The employee’s share of state unemployment insurance, and

Withholdings for employee retirement systems required by law.

Remember to cap ordinary garnishments at the lesser of 25% of disposable earnings or the amount by which disposable earnings are greater than 30 times the federal minimum wage.

Cite:  DOL Wage and Hour Division, tinyurl.com/garnishment498