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Training For Kentucky Garnishment Law Requirements

What Is A Garnishment?

A wage garnishment is any legal or equitable procedure through which some portion of a person's earnings is required to be withheld by an employer for the payment of a debt. The six basic types of garnishments are child support, federal, state, or local levies, creditor garnishments, and student loans, with the largest amount of garnishments being for child support.

Employer Guidelines For Handling Garnishments

Employers generally have to notify the debtor in writing that a wage garnishment is about to start before making a garnishment and sending payments to the creditor. The wage garnishment then typically continues until the debts are paid off or otherwise resolved. Employers are required to provide employees with a copy of garnishment paperwork.

Kentucky Garnishment Law Requirements

Kentucky employers that receive a wage garnishment must comply with Kentucky garnishment laws as well as applicable federal requirements. For most ordinary creditor garnishments, Kentucky generally limits the amount that may be withheld to the lesser of 25% of an employee's disposable earnings or the amount by which disposable earnings exceed 30 times the federal minimum hourly wage.

Kentucky Wage Garnishment Overview

A Kentucky wage garnishment is a legal process through which an employer is required to withhold part of an employee's earnings to satisfy a debt. Kentucky garnishment procedures are primarily governed by Kentucky Revised Statutes Chapters 425 and 427.

Kentucky defines earnings as compensation paid or payable for personal services, including wages, salary, commissions, bonuses, and certain periodic pension or retirement payments. Disposable earnings are the portion remaining after deductions required by law have been withheld.

How Much Can Be Garnished in Kentucky?

For an ordinary creditor garnishment, Kentucky generally limits the amount of aggregate disposable earnings that may be garnished for a workweek to the lesser of:

• 25% of the employee's disposable earnings for that week
• The amount by which the employee's disposable earnings exceed 30 times the federal minimum hourly wage

For pay periods other than weekly, the federal minimum-wage threshold is adjusted according to the applicable pay period.

These limitations generally apply to ordinary creditor garnishments. Kentucky law provides exceptions for certain support orders, Chapter 13 bankruptcy orders, and state or federal tax debts.

Kentucky Disposable Earnings

Kentucky defines disposable earnings as the portion of an individual's earnings remaining after amounts required by law to be withheld have been deducted.

Payroll should calculate disposable earnings before applying the garnishment limitation. Employers should not simply apply a percentage to gross wages or take a percentage of an employee's take-home pay without first determining the legally applicable disposable-earnings amount.

The Kentucky Wage Garnishment Process

An ordinary Kentucky wage garnishment generally begins after a creditor obtains a final judgment against the employee. The judgment creditor may then obtain an order of garnishment from the court.

When an employer receives a Kentucky garnishment order, payroll should:

• Record the date the garnishment is received
• Review the judgment and garnishment order
• Verify the employee's identity
• Determine the employee's gross earnings and disposable earnings
• Calculate the maximum amount subject to garnishment
• Review existing garnishments and support withholding orders
• Determine whether an exception to the ordinary garnishment limits applies
• Complete and return the required garnishee response
• Provide the employee with a copy of the garnishment order as required
• Withhold the amount required by the garnishment order
• Remit withheld wages according to the court's instructions
• Continue withholding while the garnishment remains effective
• Maintain records of calculations, withholding, and payments

Kentucky Garnishment Orders

Under Kentucky law, an order of garnishment may be obtained after a final judgment in favor of the creditor. The garnishment order is served on the employer, and the employer must respond according to the Kentucky Rules of Civil Procedure and the instructions contained in the order.

A Kentucky garnishment order creates a lien on nonexempt earnings earned during the pay period in which the order is served and during succeeding pay periods designated by the order.

The garnishment order must also provide instructions concerning the employer's responsibilities, including providing a copy to the employee, retaining a copy for the employer's records, and returning the appropriate copy to the court.

Kentucky Garnishment Priority

Kentucky generally establishes priority among earnings garnishment orders according to the date the order is served on the employer.

A subsequent garnishment generally takes effect at the beginning of the next succeeding pay period that is not subject to a prior order. Kentucky law also provides that a creditor may not cause two garnishment orders to be served against the same employee in the same pay period.

Employers should carefully track the service date and effective period of each garnishment affecting an employee.

Kentucky Garnishment Exemptions

Kentucky law provides exemptions that may protect certain property and income from execution, attachment, or garnishment. Certain household furnishings, personal property, motor vehicles, tools and equipment, health aids, health savings account funds, and other property may qualify for exemptions subject to statutory limits and conditions.

Kentucky also provides a specific exemption for disposable earnings under its ordinary garnishment rules, subject to exceptions for support obligations, Chapter 13 bankruptcy, and state or federal tax debts.

Employees may have additional protections under federal law depending on the type of debt and source of the funds.

Employers should not independently approve or deny an employee's exemption claim unless the applicable legal process requires the employer to do so. Payroll should follow the garnishment order and any subsequent court instructions.

Kentucky Child Support Garnishment

Child support and other support obligations are subject to special Kentucky and federal requirements and are treated differently from ordinary creditor garnishments.

Kentucky law authorizes the Attorney General to issue orders to withhold and deliver earnings for delinquent child support. Under Kentucky law, 50% of the disposable earnings against which a support debt is asserted is exempt and may be delivered to the obligor. The child support withholding order continues until the support debt is paid in full and takes priority over other debts and creditors of the debtor.

Employers processing a child support income-withholding order should follow the specific order and applicable Kentucky and federal requirements rather than applying the ordinary 25% creditor-garnishment limitation.

Kentucky Tax Garnishments

Kentucky law specifically provides that the ordinary disposable-earnings restrictions do not apply to debts due for state or federal taxes.

Federal and Kentucky tax collection actions may therefore use specialized levy or garnishment procedures. Employers receiving a tax levy should follow the instructions provided by the applicable taxing authority rather than automatically applying the ordinary Kentucky garnishment calculation.

Bankruptcy Garnishments in Kentucky

The ordinary Kentucky disposable-earnings restrictions do not apply to an order of a bankruptcy court under Chapter 13 of the federal Bankruptcy Code.

Employers should review bankruptcy-related wage orders carefully because bankruptcy withholding requirements can differ from ordinary judgment garnishments.

Student Loan Garnishment in Kentucky

Defaulted federal student loans may be subject to administrative wage garnishment under federal law. These administrative garnishments can operate under federal requirements that differ from an ordinary Kentucky judgment garnishment.

Employers receiving a federal student loan administrative wage garnishment should follow the instructions from the issuing federal agency or guaranty agency rather than automatically applying the ordinary Kentucky garnishment calculation.

Multiple Garnishments in Kentucky

Kentucky employers may receive multiple garnishment or income-withholding orders affecting the same employee. Payroll should review each order to determine its type, priority, and applicable withholding limitation.

Kentucky generally gives priority to garnishment orders according to their date of service on the employer. Support obligations and other specialized orders may be subject to different priority rules.

Employers should maintain a complete record of all garnishments affecting an employee and should not assume that multiple orders automatically permit withholding more than the applicable legal maximum.

Federal Garnishment Limits

Kentucky's ordinary wage-garnishment limitation generally follows the federal Consumer Credit Protection Act's 25% disposable-earnings limitation and 30-times-federal-minimum-wage test.

Federal law continues to apply to Kentucky employers and may impose different limits for child support, tax debts, student loans, bankruptcy, and other obligations. Payroll should identify the type of debt before calculating the withholding because the ordinary Kentucky wage-garnishment formula does not apply to every type of collection order.

Protection From Discharge

Kentucky law provides that an employee may not be discharged because the employee's earnings have been subjected to garnishment for one indebtedness.

Employers should therefore avoid adverse employment action based solely on an employee's garnishment status.

When to Stop a Kentucky Wage Garnishment

Employers should continue withholding while the garnishment remains legally effective and wages remain subject to the order.

Withholding should stop when the judgment has been satisfied or when the garnishment has been released, terminated, or modified by the court or other authorized authority.

Payroll should not stop a garnishment solely because an employee states that the debt has been paid. Appropriate documentation should be obtained before terminating or changing the withholding.

Kentucky Garnishment Recordkeeping

Employers should maintain records of:

• Garnishment orders
• Dates of service
• Court judgments and related documents
• Employee earnings
• Disposable-earnings calculations
• Amounts withheld
• Amounts remitted
• Support withholding orders
• Correspondence concerning the garnishment
• Documentation terminating or modifying the garnishment

Accurate records are especially important when an employee has multiple garnishments, support obligations, tax levies, bankruptcy orders, or changes to the underlying court order.

Important Kentucky Garnishment Compliance Point

Kentucky wage garnishment compliance requires more than applying a fixed percentage to an employee's paycheck. Payroll must identify the type of obligation, calculate disposable earnings, apply the appropriate Kentucky and federal limits, consider support and other statutory exceptions, respond to the garnishment order, and remit withheld wages according to the applicable instructions.

For an ordinary Kentucky wage garnishment, the amount subject to withholding is generally limited to the lesser of 25% of disposable earnings or the amount by which disposable earnings exceed 30 times the federal minimum hourly wage. The ordinary restrictions do not apply to certain support orders, Chapter 13 bankruptcy orders, or state and federal tax debts.

Kentucky Garnishment Law Changes

Kentucky garnishment laws and procedures can change through legislation, court decisions, and administrative requirements. Employers should periodically review current Kentucky law and the specific garnishment documents they receive to ensure that payroll calculations and procedures remain compliant.

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