North Carolina Child Support Garnishment Limits, Exemptions and Protections
While North Carolina noncustodial parents should know that any income, regardless of source, is potentially subject to child support garnishment, at least some of their income will be protected by North Carolina garnishment law. North Carolina garnishment limits are particularly restrictive in comparison to the limits set forth in the Consumer Credit Protection Act (CCPA), which have been adopted by many other states. These North Carolina garnishment limits must be adhered to even if the employee is subject to multiple support orders or other types of withholding orders. When faced with this situation, the employer should allocate withholdings according to the pro rata method.
Garnishment Limits and Exemptions
Income defined as "disposable earnings" by the CCPA is subject to a maximum withholding limit. To calculate an employee's disposable earnings, subtract all of the deductions from the employee's earnings that are required by law, such as income taxes and Social Security deductions. What you are left with are the employee's "disposable earnings," which are subject to protections. North Carolina has more restrictive withholding limits than many other states:
- 40% when there is one order of withholding;
- 45% when there is more than one withholding order, and the employee is supporting a second family; and
- 50% when there is more than one withholding order and the employee is not supporting a second family.
- When there is a withholding order for current or delinquent alimony payments, the amount withheld cannot exceed the CCPA limit of 65%.
A North Carolina employer must find out its employee's status for withholding purposes. Often, the issuing agency does not know this information, and will simply leave it up to the noncustodial parent to alert them if they are misclassified.
Allocation and Priority
Even when an employee is subject to more than one order of support, the employer may not exceed North Carolina's withholding limits. The current support due must be deducted first, and if there are any allowable disposable earnings left, the employer should then deduct for medical support premiums, followed by arrears. If there are not enough allowable disposable earnings to withhold for current support, then the pro rata method should be used. The pro rata method is based on the percentage that each support payment holds out of the employee's total allowable disposable earnings.
An employer may occasionally encounter a situation where it will receive both a support order and another type of withholding order for the same employee. If the other withholding order is state-issued, the support order takes priority over the other order. If the other order is a Chapter 13 bankruptcy repayment order, and was issued after October 17, 2005, the support order again takes priority. This prioritization holds true even if the other order was issued before the support order.
However, if the employer receives an IRS levy for an employee subject to a support order, the levy takes priority over the order. The employer should contact the agency that issued the support order to inform them of the existence of the IRS levy. The employer may also contact the IRS agent listed on the levy to see if they will accommodate the order. The IRS is generally understanding of the importance of support orders and often will agree to subordinate its own levy in favor of the support payments. If they do agree, however, the employer should be sure to get it in writing.
Protection from Discrimination
If an employer discriminates against an employee or a prospective employee because of a support order, the employer can be held liable in a civil action and is also subject to civil penalties. The employee may sue the discriminating employer for all reasonable damages, and if they have been demoted or terminated as a result of the discrimination, they can be reinstated. The statute of limitations to bring this type of action is one year from the time of the discriminatory conduct. The employer will also face a civil penalty of $100 for the first offense, $500 for the second offense, and $1,000 for any offense thereafter. The civil penalties must be sent to the North Carolina Civil Penalty and Forfeiture Fund (CPFF).