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Training For Vermont 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.

Vermont Garnishment Law Requirements

Vermont employers that receive a wage garnishment must comply with Vermont garnishment laws as well as applicable federal requirements. Vermont generally refers to wage garnishment as trustee process against earnings. State law establishes specific exemptions, court procedures, withholding requirements, and protections for employees subject to wage garnishment.

Vermont Wage Garnishment Overview

A Vermont wage garnishment is a legal process through which a creditor may require an employer to withhold part of an employee's earnings to satisfy a judgment. Vermont trustee process against earnings is primarily governed by 12 V.S.A. §§ 3167–3172.

For a money judgment, trustee process against earnings generally cannot be used until the judgment becomes final. The judgment creditor may then ask the court that entered the judgment to issue trustee process against the debtor's earnings.

How Much Can Be Garnished in Vermont?

Vermont provides substantial statutory exemptions for wages subject to trustee process. For a general judgment debt, the employee's exempt earnings are the greater of:

• 75% of weekly disposable earnings
• 30 times the federal minimum hourly wage

For a judgment arising from a consumer credit transaction, the exemption generally increases to the greater of:

• 85% of weekly disposable earnings
• 40 times the federal minimum hourly wage

The court may order a greater exemption when the employee's reasonably incurred weekly expenses for the employee and dependents exceed the statutory exemption.

These exemptions mean that, in general, no more than 25% of weekly disposable earnings may be subject to an ordinary judgment garnishment, and no more than 15% may generally be subject to a qualifying consumer-credit judgment garnishment, subject to the applicable statutory calculations and court order.

Vermont Disposable Earnings

For Vermont trustee process against earnings, disposable earnings means the portion of an individual's earnings remaining after deductions for amounts required by law to be withheld.

Earnings include compensation for personal services, including wages, salary, commissions, bonuses, and certain periodic pension or retirement payments. Vermont law also includes certain proceeds from the sale of milk for individuals engaged in dairy farming.

Employers should calculate disposable earnings before applying the applicable Vermont exemption and withholding requirement. A garnishment should not simply be calculated as a percentage of gross wages.

Vermont Wage Garnishment Process

A Vermont wage garnishment generally begins after a creditor obtains a final money judgment and asks the court to issue trustee process against the judgment debtor's earnings.

When an employer receives a Vermont wage garnishment, payroll should:

• Record the date the trustee process order is received or served
• Review the court order, judgment, notice, and withholding instructions
• Verify the employee's identity and employment status
• Determine the employee's gross earnings and disposable earnings
• Identify whether the judgment is a consumer-credit judgment
• Calculate the applicable Vermont exemption
• Determine the amount that may legally be withheld
• Review existing garnishments and support withholding orders
• Complete and return any required employer response
• Withhold wages according to the court order
• Remit withheld amounts according to the applicable instructions
• Continue withholding while the order remains effective
• Notify the appropriate parties if the employee's employment terminates
• Maintain records of calculations, withholding, and payments

Vermont Trustee Process Orders

Under Vermont law, a judgment creditor may move the court that rendered the judgment to issue trustee process against the earnings of a judgment debtor who has failed or refused to pay the judgment or make reasonable arrangements to pay it.

The court considers information concerning the judgment, the debtor's earnings, and the debtor's reasonably incurred weekly expenses for the maintenance of the debtor and dependents before entering an order approving trustee process against earnings.

The court order may provide for repetitive withholding from earnings and may be modified from time to time upon motion.

An employer that fails to honor the court's order can be liable to the judgment creditor for amounts that should have been withheld and delivered, together with applicable costs, interest, and reasonable attorney's fees.

Vermont Garnishment Exemptions

Vermont law provides specific exemptions for earnings subject to trustee process. A judgment debtor's earnings are generally exempt to the extent provided by 12 V.S.A. § 3170.

A judgment debtor receiving certain assistance from the Vermont Department for Children and Families or the Department of Vermont Health Access during the two-month period preceding the garnishment hearing may also qualify for an exemption from an order approving trustee process against earnings. The debtor must establish the exemption at the hearing.

Vermont also provides other exemptions from trustee process for certain types of property, benefits, and funds.

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

Employers should not independently determine whether an employee's wages or other property are exempt unless the applicable legal process requires the employer to make that determination. Payroll should follow the garnishment order and any subsequent court instructions.

Vermont Child Support Garnishment

Child support and other family-support obligations are subject to special Vermont and federal requirements and generally receive priority over ordinary creditor garnishments.

Vermont child support withholding is administered through the Vermont Office of Child Support. Employers receiving an income withholding order for child support should follow the specific order and applicable Vermont and federal requirements rather than applying the ordinary trustee-process calculation.

Federal law generally permits withholding up to 50% of disposable earnings when the employee is supporting a spouse or dependent child other than the person receiving support, or up to 60% when the employee is not supporting another spouse or dependent child. An additional 5% may generally be withheld when the support obligation is more than 12 weeks in arrears.

Vermont Tax Garnishments

Vermont has a separate administrative wage-garnishment procedure for delinquent state taxes. Under 32 V.S.A. § 3208, the Vermont Commissioner of Taxes may garnish a taxpayer's earnings to satisfy collectible tax liabilities.

Before initiating a tax wage garnishment, the Commissioner generally must demand payment and notify the taxpayer of the potential garnishment at least 30 days in advance. The taxpayer may have an opportunity to request an administrative hearing.

For a Vermont tax garnishment, the statutory exemption is generally the greater of 80% of weekly disposable earnings or 40 times the federal minimum hourly wage, subject to the additional protections provided by Vermont law.

Employers receiving a Vermont tax garnishment should follow the instructions issued by the Vermont Department of Taxes rather than automatically applying the ordinary judgment-garnishment calculation.

Vermont Student Loan Garnishment

Defaulted federal student loans may be subject to administrative wage garnishment under federal law. Federal administrative wage garnishment can generally require withholding of up to 15% of disposable pay for qualifying defaulted federal student loans.

Employers receiving a federal student loan administrative wage garnishment should follow the instructions from the issuing federal agency or guaranty agency.

Vermont Bankruptcy Garnishment

Bankruptcy-related wage withholding can be subject to federal bankruptcy law and may operate differently from an ordinary Vermont trustee process against earnings.

Employers receiving a bankruptcy-related wage order should review the order carefully and follow the applicable federal and Vermont requirements.

Multiple Garnishments in Vermont

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

Child support and other legally prioritized withholding orders may be subject to different rules than ordinary judgment garnishments. Employers should maintain a complete record of all garnishments affecting an employee and should not assume that multiple orders permit withholding beyond the applicable legal maximum.

Federal Garnishment Limits

Vermont employers must comply with the federal Consumer Credit Protection Act in addition to Vermont garnishment law. For ordinary consumer debts, federal law generally limits garnishment to the lesser of 25% of disposable earnings or the amount by which disposable earnings exceed 30 times the federal minimum hourly wage.

Vermont's state exemptions can provide greater protection than the federal minimum in certain circumstances. In particular, Vermont generally exempts 75% of weekly disposable earnings for ordinary judgment debts and 85% for qualifying consumer-credit judgments, subject to the applicable minimum-dollar protections and court orders.

Different federal limits apply to child support, tax debts, federal student loans, bankruptcy, and certain other obligations. Payroll should identify the type of debt before calculating the withholding.

Protection From Discharge

Vermont law specifically prohibits an employer from discharging an employee because trustee process has been issued against the employee's earnings.

An employee discharged within 60 days after service of trustee process on the employer is rebuttably presumed to have been discharged because of the trustee process. An employee who is unlawfully discharged may seek reinstatement, back wages, and damages.

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

When to Stop a Vermont Wage Garnishment

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

Vermont law provides that, upon full satisfaction or payment of the judgment debt, the judgment creditor must notify the employer in writing, after which the employer must cease withholding from the employee's earnings.

Employers should also promptly notify the court and judgment creditor when the employee's employment terminates, as required by Vermont law.

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.

Vermont Garnishment Recordkeeping

Employers should maintain records of:

• Trustee process orders
• Dates of service
• Court judgments and related documents
• Employer responses and disclosures
• Employee earnings
• Disposable-earnings calculations
• Applicable wage exemptions
• Amounts withheld
• Amounts remitted
• Support withholding orders
• Tax garnishment notices
• 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 Vermont Garnishment Compliance Points

Vermont wage garnishment compliance requires more than applying a fixed percentage to an employee's paycheck. Payroll must identify the type of obligation, determine whether the judgment is a consumer-credit judgment, calculate disposable earnings, apply the appropriate Vermont exemption, consider priority rules, respond to the trustee process order, and remit withheld wages according to the applicable instructions.

For an ordinary Vermont judgment debt, 75% of weekly disposable earnings or 30 times the federal minimum hourly wage, whichever is greater, is generally exempt. For a qualifying consumer-credit judgment, 85% of weekly disposable earnings or 40 times the federal minimum hourly wage, whichever is greater, is generally exempt. The court may approve a greater exemption when the debtor's reasonable weekly expenses for the debtor and dependents justify it. Special rules apply to child support, taxes, student loans, bankruptcy, and other obligations.

Vermont Garnishment Law Changes

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

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