OCSS AND OKESC WEBINAR - CONSUMER CREDIT PROTECTION ACT

Toby Hallows: Let's get into our first ever webinar. So we might run into some problems, some technical issues from time to time. What we would ask is if you do have a technical issue, contact either Joshua Kahoe or Barbara Perkins and they will get with our technical support; Bryan Bowden, and he will try to help you through any issues you may be having, either with audio or video (clears throat) excuse me, video problems you may be having. 

With that being said, we'll go ahead and get started. We'll have a question and answer session at the end of today's presentation, but you are welcome to ask questions to either Barbara or to Josh as the presentation is going along. All you need to do to do that is just click on their name and it'll ask you if you want to start a private chat with them, and you can do that. 

We're asking you to do that so that when everybody - not necessarily so they won't see the chat, but so that it doesn't get too convoluted. We are expecting around 75 to 80 people on the webinar today, so we want to make sure that their screens don't get too convoluted. 

With that being said, we are going to talk about the Consumer Credit Protection Act. So, the Consumer Credit Protection Act. First question is where can I find it? What is it? And how does it pertain to me as an employer? Well, you can find it using the United States code. It is Title XV, Section 1671, in Chapter 41. It actually starts in Section 1670, but that's just basically an explanation. 

What it is, is it outlines what employers are allowed to do when garnishing someone's wages based off of debts they may have acquired over the years, be it school loans, car loans, home loans, also, of course, child support, spousal support, tax levies. And it kind of breaks down what the employer can expect when it comes to these type of garnishments, what they're allowed to do, how much they're allowed to take out for these garnishments. 

And we wanted to clear up some misconceptions today. So, we've told you where you can find it. You can find it in, like I said, in the U.S. Code, Title XV, section 1671. 

What is it? We've gone over that. It breaks down about garnishment. 
How does it pertain to you as an employer? As an employer you may receive, either from a state agency or from a private creditor, a garnishment request. And this will help you determine how much you can take out of disposable income for that individual when they have these debts. 

So, what's the difference between a regular garnishment and child support? A regular garnishment is for those debts that we had discussed, be it a loan of some type, a tax levy of some type. Those are regular garnishments. And with those, as an employer, you are only allowed to take up to 25% of their disposable income to pay off those debts. 

And so, for example, if an individual had both a car loan and a home loan, and both of them were an accredited and were sent to you to have the amount taken out, the, like I said, 25% of disposable earnings for that week, or pay period, and the garnishments are on a first-come, first-served basis. 

Now child support is different. Obviously, as most of you are well aware. In that child support you take anywhere from 50-65% of disposable income to pay of the child support debt. So what are the defined limits for the two types? We talked about 25% for regular garnishment, 50-65% for child support. 

Can any other entity garnish wages? The only entities that are allowed is the state and federal governments for tax purposes. They canÆt garnish wages if past-due is owed. One of the things we want to during these webinars is to make sure everyone has contact information for the Employer Services Center. 

If you have questions about garnishment, child support, so forth, please feel free to call them at 1-866-553-2368, email them at OCSS.Contact.ESC@okdhs.org, or fax them at 405-325-8210. This will be the only time that I will read off all that information as it will show up on your screen from time to time. 

LetÆs talk about the percentages that weÆve discussed, 50-65%.So what is it that we can do from that point forward? If... 50% of the disposable income is allowed if the obligor is supporting another family; 55% of the disposable income if the obligor is supporting another family with arrears greater than twelve weeks; 60% if the obligor is not supporting another family; and 65% if they're not supporting another family and have arrears greater than twelve weeks. 

So let's talk about how earnings are defined. Earnings are defined as a periodic payment. And if you look in Title XV, you'll see that it is also broken up into several subcategories, and those are: compensation paid or payable for personal services, whether denominated as wages, salary, commission, bonus, or otherwise, and includes periodic payments, pursuant to pension or retirement program. Alright? 

So... I know one of the questions we often get is: What about someone who's on commission? You know, can we garnish a commission? Because we don't know, week-to-week, how much they're going to earn. 

The answer is yes, you can garnish that commission. You'll just have to do the calculation as to how much can go in for child support for that week. Now, if they're paid commission on a monthly basis, you can just do it on a monthly basis. But it does... just because an individual is on commission, doesn't mean that you can't withhold for child support purposes. Or for that matter, any other debt as well. 

The next thing that we want to look at is what is meant by disposable income? Disposable income is the income that remains after anything is taken out that is required by law. Some of the things that are taken out are, obviously, social security taxes, FICA, state and federal taxes - those are all required by law. 

Also if an individual works for say a state agency, they are actually required by law to have their retirement taken out. Say for the Teachers Association. There is actually a statutory pension that they must pay into. And so that will actually be calculated before disposable income. 

However, if the law itself does not require some sort of retirement be taken out, then it... would not be considered as part of... it will be considered as part of disposable income just as an additional... garnishment... not garnishment, withholding from their pay. 

Well I'll show you an example of this and what it would look like. And here is the contact information once again for the ESC. So letÆs talk about mandatory deductions, federal, state, local taxes, social security, Medicare, statutory pension contributions, and any other are required by law. 

There is a possibility that from state to state you would have to look and see do they have a law requiring some sort of mandatory deduction that isn't covered under these. Voluntary deductions would be car payments, student loans, insurance a lot of times, stock options, things of those nature. 

Those are all voluntary deductions that people will request to be taken out of their paycheck. They would not be included in a calculation of disposable income. So, let's take someone who is making gross pay of $2,500 a month. The deduction as you see listed there as federal income tax, state income tax, FICA, Medicare, a stock option, a car payment, and an IRA that is voluntary. 

So we want to know, what are... which ones are the mandatory ones? Obviously with federal income tax, the state income tax, FICA, and Medicare are all mandatory deductions that must be done before you can discover what the disposable income for that individual is. The stock option, the car payment, and the voluntary IRA are not considered mandatory and therefore wouldn't be considered as part of the disposable income. 

So for this individual, his disposable income is $1,894.40. Okay, so once we have that disposable income, now we want to see whatÆs considered allowable disposable income. What percentage do I use? Obviously we talked about 50% if they're supporting another family and have arrears less than 12 weeks, 55% if they're supporting another family and have arrears greater than 12 weeks, 60% if they have arrears - excuse me if they are not supporting another family, and 65% if they are not supporting a second family and have arrears greater than 12 weeks. 

And you'll notice that taking that disposable income of $1,894.40, and applying it to the withholding percentages, the allowable disposable income that can be used for satisfying child support obligations is shown on the right-hand side. At 50% would be $947.20, 55% - $1,041.70, 
at 60% $1,136.64, and at 65% $1,241.36. 

Now we have a reminder down at the bottom, a reminder to tell you to never take out more than what the child support order calls for. Just because the allowable disposable income for the individual in this case, who had just over $1,200 that's allowable to pay for child support, if the child support order only calls for $350, that would be the max you would take out. 

Individuals that have multiple cases, often times find themselves up against the wall when it comes to allowable disposable income. The second part of our reminder should be, "And never take out more than that allowable disposable income just because an individual has multiple child support accounts." 

Say for example the individual that had over $1,200 in allowable disposable income, but if they have multiple cases where their child support comes out on a monthly basis, itÆs $1,500, the most you can take out is still the $1,200 amount. You wouldn't be able to take out all $1,500. You have done your job as an employer at that point. 

And so there is nothing further you need to do. Once the money gets to the state agency, they will then disperse it amongst the actual cases themselves and you needn't worry about that. So, we talked about disposable income and we talked about allowable disposable income. 

Once again here is the contact information for the ESC. So, that gets us through our discussion of Consumer Credit Protection Act limits. What we want to know now is what questions do you, what might you have as it pertains to Consumer Credit Protection Act? 

Okay, so the first question we have is: what is included in mandatory reductions for disposable income and is it the same as net income? This is a question that we get quite frequently. And as we discussed already, this mandatory reductions for disposable income have to do with anything required by law, either federal or state law. 

Here in the state of Oklahoma, I'm not aware of any mandatory deductions that are required by law other than those required by the federal law. It is not the same as net income. Net income would be all deductions taken out and that gives your net income, either voluntary or mandatory deductions. 

What is a formula for calculating disposable income? As we said, you take the gross income of that individual, any deductions that are required by law, - excuse me - as mandatory, they are then subtracted from that gross income and that gives you your disposable income amount. 

This question that is next, we have gotten quite frequently. How do I know if my employee has more than one family? The only way for you truly to know is to ask the employee. There is no way we can... A lot of times in the past, we talked about looking at their tax returns. 

Look at their W-4. Are they declaring dependents? However, after discussions with both our federal partners and some of our legal analysts inside Child Support, we have discovered that is not a way to determine whether someone has a secondary family or not. You actually have to ask the individual. Are they supporting a second family? 

If they tell you yes, you have to take them at their word. Does it matter what state the child support order is from? The answer is no, it doesn't matter where it's from. However, you need to remit any child support withholdings through that state at the address they have provided to you. There is also another tenet here that we run into quite a bit, in that I receive a child support order from the state of Oklahoma and I also receive one from state "X" for the same child, which one am I to honor? 

The first thing we need to determine is whether or not one is for arrears only. In other words, the active child support case has been closed out in one state and has now been activated in another state. 

However, in the first state may still have monies owed, either to the state or interest owed to the CP, the custodial parent. And so there is a possibility that there could be two support orders for the same child from two different states. 

You should never receive two support orders for the same child from the same state. If it's from the same state, there should just be an arrears balance and a current support balance. If there is an arrears balance, if you can't tell from the orders themselves, is there arrears balance on the case, you can always contact the Employer Services Center and they'll be happy to do some research or connect you with the local office to get that determination made. 

You can also contact the local offices, especially if you already have a good working relationship with them in order to get that question answered. 

The next question we have: Would union dues be a mandatory deduction? The answer is no unless they are required by law. I have not heard of any states that require union dues being paid through a legal remedy but I can't say with 100% certainty there is not a state out there that wouldn't do something like that. 

But unless there is a state statute that says it's required that it comes out of their pay, then the answer would be no. Is spousal support, or alimony, included in the calculations? The answer to that is that it can be. It certainly can be included in those calculations. Spousal support is included, if it's ordered, is included as part of Oklahoma's child support orders. 

You should be able to see it on the form itself as a separate line and then it will be in the total amount. Spousal support is usually included on other states' orders as well, however, there are some states that may use a different form for spousal support versus child support. 

Do I need to calculate the CCPA limits on each pay period? The answer to that is if the pay amount changes for an individual from pay period to pay period, then yes you would need to calculate the CCPA limits for each pay period. 

Now, if an individual is making an amount of money that allows him to satisfy his child support orders and doesn't even approach the 50% mark of disposable income, then you are probably going to be pretty safe unless the pay amounts differ so greatly from pay period to pay period. 

Are medical insurance costs included in the CCPA calculations? The answer to that is also yes. On the forms, once again, there are spaces for either cash medical, or medical insurance, or fixed medical costs. Those must be shown on the form and added in the total amount of child support owed. So those are included in the calculations themselves. 

I received a National Medical Support Notice and it gives me a dollar figure as the maximum amount the insurance costs for the children. How does that impact the CCPA limit? That's a good question. The dollar figure is a maximum amount is just letting you know the absolute maximum that you can charge an employee for medical insurance for those children. It doesn't impact the CCPA limit in that as long as we reached the 50-65%, it doesn't affect how much you can withhold. It affects how much you can actually charge for insurance. 

My employee has three child support orders, does that make a difference? The difference is that you must make sure you add up all three orders to see how much is owed completely so you can determine whether or not the allowable disposable income will actually cover all three orders or not. That is the difference it makes as opposed to a single order. You must add up all three at the same time so you have the total amount due for child support for that one individual. 

If you have any other questions or concerns about the Consumer Credit Protection Act limits - how to calculate them, how to determine whether or not someone... what percentage they fall under - as we mentioned, please go ahead and contact the Employer Services Center and they will be more than happy to either walk you through it or to point you in the direction that you need to go. 

If you need an actual legal site, they can provide that for you. If you haven't already received, we would highly recommend you contact the ESC and get our employer handbook. This handbook will allow you to see the Consumer Credit Protection Act and calculate withholdings inside of it so you'll have a reference handy and available to you. However, if you would like to help save the environment and not use paper, you can also go to the website OKESC.org and there is actually a PDF-formatted employer handbook available through the website. 

I see some other people are typing questions, I'm assuming to Josh and to Barbara, and when those are answered we will try to find a way to provide anyone the answers to all the questions that were asked today. That's all we have for today. This went a little shorter than we anticipated. Like I said, it was our first one. We are going to start doing these, we're hoping on a monthly basis or at least every two months.  

Okay. What weÆre going to try to do is go in two different directions. We're going to try to do some webinars on medical support issues and some webinars on income withholding issues. That way if you do have it divided inside of your company, to where certain individuals handle income withholding orders and some individuals handle medical benefits, we'll have specific ones so that those individuals can tune in for that specific topic they would like to have. 

We are going to try to get one of our federal partners, Bill Stewart, to come on later in the year and do a webinar on electronic income withholding orders. The next webinar we are looking at doing in March, if I'm correct. Barbara, if you could type that to everyone and let them know if I am correct on that. 

With that being said, that's all we have for today. If you would like to stay on and chat with either Josh or Barb, we encourage you to do so. May 17th, see I was way off. May 17th will be our next webinar session. And I do believe we are actually looking at doing medical support on that webinar.