How Much Can Unemployment Garnish From My Paycheck?

Unemployment wage garnishment is a process where a state unemployment agency recovers overpaid benefits directly from an individual’s current earnings. This collection action typically occurs when an individual received unemployment funds they were not eligible for, and the state is now seeking to reclaim those amounts.

Understanding Unemployment Overpayments

An unemployment overpayment occurs when an individual receives benefits they were not entitled to receive. Overpayments can arise for various reasons, some of which may not be the claimant’s fault.

Common causes include misreporting income, administrative errors, or changes in eligibility not promptly communicated. An appeal ruling might also reverse eligibility for benefits already received. Fraudulent overpayments, where an individual intentionally provides false information, are distinct and may incur additional penalties.

States typically identify potential overpayments through routine audits, employer reports, or cross-referencing data. When an overpayment is detected, the state unemployment agency usually sends a “Notice of Potential Overpayment” to the individual, requesting additional information. If an overpayment is confirmed, a “Notice of Overpayment” is issued, detailing the amount owed and providing information on how to appeal the determination. Individuals have a limited timeframe, typically 15 to 30 days, to respond to these notices or file an appeal.

Limits on Unemployment Wage Garnishment

The amount of a paycheck garnished for unemployment overpayments is subject to federal law, the Consumer Credit Protection Act (CCPA). This law sets limits on how much of an employee’s disposable earnings can be withheld. Disposable earnings are defined as the amount of pay remaining after legally required deductions, such as federal, state, and local income taxes, Social Security, and Medicare. Voluntary contributions, like health insurance or retirement plans not mandated by law, are not subtracted when calculating disposable earnings.

For most types of garnishments, including unemployment overpayments, the CCPA limits the weekly amount that can be garnished to the lesser of two figures. This is either 25% of an employee’s disposable earnings, or the amount by which an employee’s disposable earnings exceed 30 times the federal minimum wage. As of 2025, the federal minimum wage is $7.25 per hour. Therefore, if an individual’s weekly disposable earnings are $217.50 ($7.25 x 30) or less, no garnishment can occur.

If weekly disposable earnings are more than $217.50 but less than $290.00 ($7.25 x 40), the amount above $217.50 can be garnished. If weekly disposable earnings are $290.00 or more, a maximum of 25% can be garnished. It is important to note that while federal law sets minimum protections, individual states may have laws that provide greater protection to employees, allowing a lower percentage or higher minimum threshold for garnishment.

The Garnishment Process

Once an unemployment overpayment is established and voluntary repayment efforts are unsuccessful, the state unemployment agency may initiate wage garnishment. The process typically begins with the state agency sending a notice of intent to garnish wages to the individual. This notice details the outstanding overpayment amount and informs the individual that garnishment proceedings will commence.

Following this, an administrative order or a court order for wage garnishment is issued and sent to the individual’s employer. The employer then has a legal obligation to comply with this order by withholding a specified portion of the employee’s wages. The employer is responsible for calculating the correct amount to be garnished based on the order and applicable federal and state laws, and then remitting these funds to the state agency.

While federal law does not mandate employer notification of a garnishment order, many states do require it. Even where not legally required, employers often provide employees with details about the garnishment, including the amount withheld and the creditor involved. The garnishment deductions continue from each paycheck until the full overpayment debt, including any accrued interest or penalties, is satisfied. The employer will typically receive official notice from the issuing authority when the garnishment period concludes.

Managing Unemployment Overpayments

Individuals facing an unemployment overpayment can take proactive steps to manage the debt, potentially avoiding or mitigating wage garnishment. One important option is to request a waiver of the overpayment. A waiver may be granted, particularly for non-fraudulent overpayments, if specific criteria are met.

States consider granting a waiver if the individual was “without fault” in causing the overpayment and if repayment would be “against equity and good conscience.” “Without fault” means the overpayment occurred due to circumstances outside the individual’s control, such as agency error or miscommunication. “Against equity and good conscience” refers to situations where repayment would cause financial hardship, such as an inability to meet basic living expenses, or if the individual relied on the benefits to their detriment. The specific definitions and application of these criteria can vary by state.

Another option is to establish a voluntary repayment plan with the state unemployment agency. This allows individuals to make scheduled payments towards the overpayment debt, often avoiding forceful collection methods like wage garnishment or tax refund offsets. Repayment plans are negotiated directly with the agency and can provide a structured approach to resolving the debt. Individuals should contact their state’s unemployment agency to inquire about waiver applications or setting up a repayment plan.