Commercial Garnishment of Federal Employees' Pay

OFFICE OF PERSONNEL MANAGEMENT

5 CFR Part 582

RIN 3206-AF83

Commercial Garnishment of Federal Employees' Pay

AGENCY: Office of Personnel Management.

ACTION: Interim rule with request for comments.

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SUMMARY: The Office of Personnel Management (OPM) is issuing interim

regulations to implement the commercial garnishment of Federal

employees' pay. This part provides procedures and guidance for

Executive Branch agencies of the Federal Government to process

commercial garnishment orders, including tax levies from State and

local governments.

DATES: Effective date: March 29, 1994. Comments should be received by

April 28, 1994.

ADDRESSES: Send or deliver comments to Lorraine Lewis, General Counsel,

Office of Personnel Management, room 7355, 1900 E Street, NW.,

Washington, DC 20415.

FOR FURTHER INFORMATION CONTACT: Murray M. Meeker, Attorney, Office of

the General Counsel, (202) 606-1920.

SUPPLEMENTARY INFORMATION: On October 6, 1993, Congress enacted section

9 of Public Law 103-94 which waived the Federal Government's sovereign

immunity to permit compliance with garnishment orders for commercial

debts. On February 3, 1994, the President signed Executive Order Number

12897 which delegated responsibility to OPM to issue implementing

regulations for most of the Executive Branch. These regulations are in

accordance with this delegation of authority. OPM anticipates that in

most instances, agents previously designated to receive garnishment

orders based on obligations of child support and/or alimony will be

similarly designated to receive commercial garnishment orders. OPM

requests that in addition to providing comments concerning these

proposed regulations, agencies advise OPM if they would prefer to

designate different agents to receive commercial garnishment orders.

Because the commercial garnishment provisions in Public Law 103-94,

section 9, became effective on February 3, 1994, OPM believes that it

is important to issue these regulations as an interim rule with an

immediate effective date. OPM believes that the need for immediate

implementing regulations to facilitate the processing of and compliance

with commercial garnishment orders both justifies and necessitates

publication without a Notice of Proposed Rulemaking as would ordinarily

be provided pursuant to 5 U.S.C. 553(b)(A). For these same reasons, OPM

believes that a delayed effective date is not required pursuant to 5

U.S.C. 553(d)(2). OPM will, however, consider any public comments

before issuing a final rule.

Regulatory Flexibility Act

I certify that these regulations will not have significant economic

impact on a substantial number of small entities because their effects

are limited to Federal employees and their creditors.

Executive Order 12866, Regulatory Review

This rule has been reviewed by the Office of Management and Budget

in accordance with Executive Order 12866.

List of Subjects in 5 CFR Part 582

Claims.

U.S. Office of Personnel Management.

Lorraine A. Green,

Deputy Director.

Accordingly, OPM is adding part 582 of title 5, Code of Federal

Regulations as follows:

PART 582--COMMERCIAL GARNISHMENT OF FEDERAL EMPLOYEES' PAY

Subpart A--Purpose, Definitions, and Exclusions

Sec.

582.101 Purpose.

582.102 Definitions.

582.103 Exclusions

Subpart B--Service of Legal Process

582.201 Agent to receive process.

582.202 Service of legal process.

582.203 Information minimally required to accompany legal process.

Subpart C--Compliance with Process

582.301 Suspension of payment.

582.302 Notification of employee-obligor.

582.303 Response to legal process or interrogatories.

582.304 Nonliability for disclosure.

582.305 Honoring legal process.

582.306 Lack of entitlement by the employee-obligor to pay from the

agency served with legal process.

Subpart D--Consumer Credit Protection Act Restrictions

582.401 Aggregate disposable earnings.

582.402 Maximum garnishment limitations.

Subpart E--Implementation by Agencies

582.501 Rules, regulations, and directives by agencies.

Authority: 5. U.S.C. 5520a; 15 U.S.C. 1673; E.O. 12897.

Appendix A to Part 582--List of Agents Designated To Accept Legal

Process

Subpart A--Purpose, Definitions, and Exclusions

Sec. 582.101 Purpose.

Section 5520a of title 5 of the United States Code provides that

with certain exceptions set forth in this part, pay from an agency to

an employee is subject to legal process in the same manner and to the

same extent as if the agency were a private person. The purpose of this

part is to implement the objectives of section 5520a as they pertain to

each executive agency of the United States Government, except with

regard to employees of the United States Postal Service, the Postal

Rate Commission, and the General Accounting Office.

Sec. 582.102 Definitions.

In this part--

(a) Agency means each agency of the executive branch of the Federal

Government, excluding the United States Postal Service, the Postal Rate

Commission, and the General Accounting Office; agency does not include

the government of the District of Columbia or the territories and

possessions of the United States.

(b) Employee or employee-obligor means an individual who is

employed by an agency as defined in this section; except for reemployed

annuitants and retired members of the uniformed services who are

employed by an agency, employee does not include a retired employee,

member of the uniformed services, or a retired member of the uniformed

services.

(c) Legal process means any writ, order, summons, or other similar

process in the nature of garnishment, which may include an attachment,

writ of execution, court ordered wage assignment, or tax levy from a

State or local government, which--

(1) Is issued by: (i) A court of competent jurisdiction, including

Indian tribal courts, within any State, territory, or possession of the

United States, or the District of Columbia. As stated in section

582.101, pay is subject to legal process in the same manner and to the

same extent as if the agency were a private person. There is,

therefore, no requirement in this part that, for example, legal process

be signed by a judge; or

(ii) An authorized official pursuant to an order of a court of

competent jurisdiction or pursuant to State or local law; or

(iii) A State agency authorized to issue income withholding notices

pursuant to State or local law; and

(2) Orders an agency to withhold an amount from the pay of an

employee-obligor and to make a payment of such withholding to a person

for a specifically described satisfaction of a legal debt of the

employee-obligor, or recovery of attorney fees, interest, or court

costs;

(d) Person may include an individual, partnership, corporation,

association, joint venture, or private organization, and includes the

plural of that term; person may include a State or local Government as

well as a foreign entity or a foreign governmental unit.

(e) In conformance with 5 U.S.C. 5520a, pay means basic pay;

premium pay paid under chapter 55, subchapter V, of title 5 of the

United States Code; any payment received under chapter 55, subchapters

VI, VII, or VIII, of title 5 of the United States Code; severance pay

and back pay under chapter 55, subchapter IX, of title 5 of the United

States Code; sick pay, and any other paid leave; incentive pay;

locality pay (including interim geographic adjustments, special pay

adjustments for law enforcement officers, and locality-based

comparability payments); and any other compensation paid or payable for

personal services, whether such compensation is denominated as pay,

wages, salary, lump-sum leave payments, commission, bonus, award, or

otherwise; but does not include awards for making suggestions,

reimbursement for expenses incurred by an individual in connection with

employment, or allowances in lieu thereof.

Sec. 582.103 Exclusions.

In determining the amount of pay subject to garnishment under this

part, there shall be excluded amounts which:

(a) Are owed by the employee-obligor to the United States;

(b) Are required by law to be deducted from the employee-obligor's

pay, including, but not limited to: (1) Amounts withheld from benefits

payable under title II of the Social Security Act;

(2) Federal employment taxes; and

(3) Amounts deducted for Medicare;

(c) Are properly withheld for Federal, State, or local income tax

purposes, if the withholding of the amounts is authorized or required

by law and if amounts withheld are not greater than would be the case

if the employee-obligor claimed all dependents to which the employee-

obligor were entitled. The withholding of additional amounts pursuant

to section 3402(i) of title 26 of the United States Code may be

permitted only when the employee-obligor presents evidence of a tax

obligation which supports the additional withholding;

(d) Are deducted as health insurance premiums;

(e) Are deducted as normal retirement contributions, not including

amounts deducted for supplementary coverage. For purposes of this

section, all amounts contributed under sections 8351 and 8432(a) of

title 5 of the United States Code to the Thrift Savings Fund are deemed

to be normal retirement contributions. Except as provided in this

paragraph, amounts voluntarily contributed toward additional retirement

benefits are considered to be supplementary; or

(f) Are deducted as normal life insurance premiums from salary or

other remuneration for employment, not including amounts deducted for

supplementary coverage. Federal Employees' Group Life Insurance

premiums for ``Basic Life'' coverage are considered to be normal life

insurance premiums; all optional Federal Employees' Group Life

Insurance premiums and any life insurance premiums paid for by

allotment are considered to be supplementary.

Subpart B--Service of Legal Process

Sec. 582.201 Agent to receive process.

(a) Except as provided in appendix A to this part, appendix A to 5

CFR part 581 lists agents designated to accept service of process under

part 581 and this part.

(b) United States Attorneys are not considered appropriate agents

to accept service of process.

Sec. 582.202 Service of legal process.

(a) A party using this part shall serve legal process on the agent

to receive process as explained in Sec. 582.201. Where the legal

process is directed to an agency, and the purpose of the legal process

is to compel an agency to garnish an employee's pay, the legal process

need not expressly name the agency as a garnishee.

(b) Service of legal process may be accomplished by certified or

registered mail, return receipt requested, or by personal service upon

the agent to receive process as explained in Sec. 582.201, or if no

agent has been designated, then upon the head of the employee-obligor's

employing agency. The designated agent shall note the date and time of

receipt on the legal process.

(c) Parties bringing garnishment actions shall comply with the

service of process provisions in this section. Service will not be

effective where parties fail to comply with the service of process

provisions of this section, notwithstanding whether the party bringing

the garnishment action has complied with the service of process

requirements of the jurisdiction issuing the legal process.

Sec. 582.203 Information minimally required to accompany legal

process.

(a) Sufficient identifying information must accompany the legal

process in order to enable processing by the agency. Parties seeking

garnishment actions are, therefore, asked to provide the following

identifying information concerning the employee-obligor:

(1) Full name;

(2) Date of birth;

(3) Employment number or social security number;

(4) Component of the agency for which the employee-obligor works;

(5) the official duty station or worksite; and

(6) home address.

(b) If the information submitted is not sufficient to identify the

employee-obligor, the legal process shall be returned directly to the

court, or other authority, with an explanation of the deficiency.

However, prior to returning the legal process, if there is sufficient

time prior to the time limits imposed in Sec. 582.303, an attempt

should be made to inform the party who caused the legal process to be

served, or the party's representative, that it will not be honored

unless adequate identifying information is supplied.

Subpart C--Compliance With Legal Process

Sec. 582.301 Suspension of payment.

Upon proper service of legal process as specified in Secs. 582.202

and 582.203, the agency shall suspend, i.e., withhold, payment of such

moneys for the amount necessary to permit compliance with the legal

process in accordance with this part.

Sec. 582.302 Notification of employee-obligor.

(a) As soon as possible, but not later than 15 calendar days after

the date of valid service of legal process, the agent designated to

accept legal process shall send to the employee-obligor, at his or her

duty station or last known home address, written notice that such

process has been served, including a copy of the legal process;

(b) The agency may provide the employee-obligor with the following

additional information: (1) Copies of any other documents submitted in

support of or in addition to the legal process;

(2) Notice: That the United States does not represent the interests

of the employee-obligor in the pending legal proceedings; and

(3) Advice: That the obligor may wish to consult legal counsel

regarding defenses to the legal process that he or she may wish to

assert.

Sec. 582.303 Response to legal process or interrogatories.

(a) Whenever the designated agent is effectively served with legal

process, the agent shall respond within 30 calendar days, or within

such longer period as may be prescribed by applicable State or local

law, after the date valid service is made. The agent shall also respond

within this time period to interrogatories which accompany legal

process.

(b) If State or local law authorizes the issuance of

interrogatories prior to or after the issuance of legal process, the

agent shall respond to the interrogatories within 30 calendar days, or

within such longer period as may be prescribed by applicable State or

local law, after receipt.

Sec. 582.304 Nonliability for disclosure.

(a) No agency employee whose duties include responding to

interrogatories pursuant to Sec. 582.303(b), shall be subject to any

disciplinary action or civil or criminal liability or penalty for any

disclosure of information made in connection with the carrying out of

any duties pertaining directly or indirectly to answering such

interrogatories.

(b) However, an agency would not be precluded from taking

disciplinary action against an employee who consistently or purposely

failed to provide correct information requested by interrogatories.

Sec. 582.305 Honoring legal process.

(a) The agency shall comply with legal process, except where the

process cannot be complied with because: (1) It is not regular on its

face;

(2) The legal process would require the withholding of funds not

deemed pay as described in Sec. 582.102(a)(5);

(3) It does not comply with section 5520a of title 5 of the United

States Code or with the mandatory provisions of this part; or

(4) An order of a court of competent jurisdiction enjoining or

suspending the operation of the legal process has been served on the

agency.

(b) While an agency will not comply with legal process which, on

its face, indicates that it has expired or is otherwise no longer

valid, legal process will be deemed valid notwithstanding the fact that

the underlying debt and/or the underlying judgment arose prior to the

effective date of section 5520a of title 5 of the United States Code.

(c) While the filing of an appeal by an employee-obligor will not

generally delay the processing of a garnishment action, if the

employee-obligor establishes that the law of the jurisdiction which

issued the legal process provides that the processing of the

garnishment action will be suspended during an appeal, and if the

employee-obligor establishes that he or she has filed an appeal, the

employing agency shall comply with the applicable law of the

jurisdiction and delay or suspend the processing of the garnishment

action.

(d) Under the circumstances set forth in Sec. 582.305 (a) or (b),

or where the agency is directed by the Justice Department not to comply

with the legal process, the agency shall respond directly to the court,

or other authority, setting forth its reasons for non-compliance with

the legal process. In addition, the agency shall inform the party who

caused the legal process to be served, or the party's representative,

that the legal process will not be honored. Thereafter, if litigation

is initiated or appears imminent, the agency shall immediately refer

the matter to the United States Attorney for the district from which

the legal process issued. To ensure uniformity in the executive branch,

agencies which have statutory authority to represent themselves in

court shall coordinate their representation with the United States

Attorney.

(e) In the event that an agency is served with more than one legal

process or garnishment order with respect to the same payments due or

payable to the same employee, the agency shall satisfy such processes

in priority based on the time of service: Provided, That in no event

will the total amount garnished for any pay or disbursement cycle

exceed the applicable limitation set forth in Sec. 582.402. Provided

further, That processes which are not limited in time shall preserve

their priority based on time of service until fully discharged.

(f) Legal process to which an agency is subject under sections 459,

461, and 462 of the Social Security Act (42 U.S.C. 659, 661, and 662)

for the enforcement of the employee's legal obligation to provide child

support or make alimony payments, shall have priority over any legal

process to which an agency is subject under this section.

(g) Neither the United States, any disbursing officer, nor any

executive agency shall be liable for any payment made from moneys due

from, or payable by, the United States to any individual pursuant to

legal process regular on its face, if such payment is made in

accordance with this part. Where an agency initially determines that

legal process should not be honored, if it subsequently determines that

its initial determination was erroneous, it may correct its initial

determination and honor the legal process. If an agency corrects an

error or is required to do so by a court or other authority, under no

circumstances will the agency be required to pay more than it if had

originally honored the legal process.

(h) Agencies affected by legal process served under this part shall

not be required to vary their normal pay or disbursement cycles to

comply with the legal process. However, legal process, valid at the

time of service, which is received too late to be honored during the

disbursement cycle in which it is received, shall be honored, to the

extent that the legal process may be satisfied, during the next

disbursement cycle within the limits set forth in Sec. 582.402. The

fact that the legal process may have expired during this period would

not relieve the agency of its obligation to honor legal process which

was valid at the time of service. If, in the next disbursement cycle,

no further payment will be due from the agency to the employee-obligor,

the agency shall follow the procedures set forth in Sec. 582.306.

(i) Agencies need not establish escrow accounts in order to comply

with legal process. Therefore, even if the amount garnished by an

agency in one disbursement cycle is not sufficient to satisfy the

entire indebtedness, the agency need not retain those funds until the

amount retained would satisfy the entire indebtedness. On the contrary,

agencies will, in most instances, remit the garnished amount after each

disbursement cycle. Agencies need not pro-rate payments for less than a

full disbursement cycle.

(j) If any agency receives legal process which is regular on its

face, the agency shall not be required to ascertain whether the

authority which issued the legal process had obtained personal

jurisdiction over the employee-obligor.

(k) At the discretion of the executive agency, the agency's

administrative costs in executing a garnishment may be added to the

garnishment amount and the agency may retain costs recovered as

offsetting collections. An administrative fee may be assessed for each

legal process that is received and processed by an agency.

(l) Where an employee-obligor establishes that he or she has filed

a bankruptcy petition under section 301, 302, or 303 of title 11 of the

United States Code, the agency would be required to comply with the

automatic stay provision of the Revised Bankruptcy Act, section 362(a)

of title 11 of the United States Code, and cease any garnishment action

affecting the employee-obligor petitioner.

Sec. 582.306 Lack of entitlement by the employee-obligor to pay from

the agency served with legal process.

(a) When legal process is served on an agency and the individual

identified in the legal process as the employee-obligor is found not to

be entitled to pay from the agency, the agency shall follow the

procedures set forth in the legal process for that contingency or, if

no procedures are set forth therein, the agency shall return the legal

process to the court, or other authority from which it was issued, and

advise the court, or other authority, that the identified employee-

obligor is not entitled to any pay from the agency.

(b) Where it appears that the employee-obligor is only temporarily

not entitled to pay from the agency, the court, or other authority,

shall be fully advised as to why, and for how long, the employee-

obligor's pay will not be garnished, if that information is known by

the agency and if disclosure of that information would not be

prohibited.

(c) In instances where an employee-obligor separates from

employment with an agency that had been honoring a continuing legal

process, the agency shall inform the party who caused the legal process

to be served, or the party's representative, and the issuing court, or

other authority, that the garnishment action is being discontinued. In

cases where the employee-obligor has been employed by either another

agency or by a private employer, and where this information is known by

the agency, the agency shall provide the party with the designated

agent for the new employing agency or with the name and address of the

private employer.

Subpart D--Consumer Credit Protection Act Restrictions

Sec. 582.401 Aggregate disposable earnings.

In accordance with the Consumer Credit Protection Act, the

aggregate disposable earnings under this part are the employee-

obligor's pay less those amounts excluded in accordance with

Sec. 582.103.

Sec. 582.402 Maximum garnishment limitations.

Pursuant to section 1673(a)(1) of title 15 of the United States

Code (the Consumer Credit Protection Act, as amended) and the

Department of Labor regulations at title 29, Code of Federal

Regulations, part 870, the following limitations are applicable: (a)

Unless a lower maximum limitation is provided by applicable State or

local law, the maximum part of an employee-obligor's aggregate

disposable earnings subject to garnishment to enforce any legal debt

other than an order for child support or alimony, shall not exceed 25

percent of the employee-obligor's aggregate disposable earnings for any

workweek. Furthermore, the following dollar limitations, which are

contained in title 29 of the Code of Federal Regulations, part 870,

must be applied in determining the garnishable amount of the employee's

aggregate disposable earnings: (1) If the employee-obligor's aggregate

disposable earnings for the workweek are in excess of 40 times the Fair

Labor Standards Act (FLSA) minimum hourly wage, 25% of the employee-

obligor's aggregate disposable earnings may be garnished. For example,

when the FLSA minimum wage rate is $4.25 per hour, this rate multiplied

by 40 equals $170.00 and thus, if an employee-obligor's disposable

earnings are in excess of $170.00 for a workweek, 25% of the employee-

obligor's disposable earnings are subject to garnishment.

(2) If the employee-obligor's aggregate disposable earnings for a

workweek are less than 40 times the FLSA minimum hourly wage,

garnishment may not exceed the amount by which the employee-obligor's

aggregate disposable earnings exceed 30 times the current minimum wage

rate. For example, at an FLSA minimum wage rate of $4.25 per hour, the

amount of aggregate disposable earnings which may not be garnished is

$127.50 [$4.25 x 30]. Only the amount above $127.50 is garnishable.

(3) If the employee-obligor's aggregate disposable earnings in a

workweek are equal to or less than 30 times the FLSA minimum hourly

wage, the employee-obligor's earnings may not be garnished in any

amount.

(b) There is no limit on the percentage of an employee-obligor's

aggregate disposable earnings that may be garnished for a State or

local tax obligation or for bankruptcy purposes.

Subpart E--Implementation by Agencies

Sec. 582.501 Rules, regulations, and directives by agencies.

Appropriate officials of all agencies shall, to the extent

necessary, issue implementing rules, regulations, and/or directives

that are consistent with this part.

Appendix A to Part 582--List of Agents Designated To Accept Legal

Process

(The agents designated to accept legal process are listed in

appendix A to part 581. Appendix A to part 582 provides listings

only for those executive agencies where the designations differ from

those found in appendix A to part 581.)

I. Departments

Department of Defense, Defense Finance and Accounting Service,

Cleveland Center, Office of General Counsel, Attention: Code L, P.O.

Box 998002, Cleveland, OH 44199-8002, (216) 522-5301.

Agents for receipt of all legal process for all Department of

Defense civilian employees except where another agent has been

designated as set forth below.

For requests that apply to employees of the Army and Air Force

Exchange Service or to civilian employees of the Defense Contract Audit

Agency (DCAA) and the Defense Logistics Agency (DLA) who are employed

outside the United States: See appendix A to part 581.

For requests that apply to civilian employees of the Army Corps of

Engineers, the National Security Agency, the Defense Intelligence

Agency, and non-appropriated fund civilian employees of the Air Force,

serve the following offices:

Army Corps of Engineers, U.S. Army Corps of Engineers, Omaha District,

Central Payroll Office, Attn: Garnishments, P.O. Box 1439 DTS, Omaha,

NE 68101-1439.

National Security Agency, General Counsel, National Security Agency/

Central Security Service, 9800 Savage Rd., Ft. G. Mead, MD 20755-6000.

Defense Intelligence Agency, Office of General Counsel, Defense

Intelligence Agency, Pentagon, 2E238, Washington, DC 20340-1029.

Air Force non-appropriated fund employees, Office of General Counsel,

Air Force Services Agency, 10100 Reunion Place, suite 503, San Antonio,

TX 78216-4138

For civilian employees of the Army, Navy and Marine Corps who are

employed outside the United States, serve the following offices:

Army Civilian Employees Europe, 266th Theater Finance Command, ATTN:

AEUCF-CPF, APO New York 09007-1037.

Army Civilian Employees in Japan, US Army F&AO Japan, Unit 45005, Camp

Zama, APO AP 96343-0087.

Army Civilian Employees in Korea, Commander, 175th TFC (Korea), APO AP

96301-007361.

Army Civilian Employees in Panama, DCSRM Finance & Accounting Office,

Unit 7153, ATTN: SORM-FAP-C, APO AA 34004-5000.

Navy and Marine Corps Civilian Employees Overseas, Director of the

Office of Civilian Personnel Management, Office of the General Counsel,

Navy Department, 800 N. Quincy St., Arlington, VA 22203-1998.

[FR Doc. 94-7233 Filed 3-28-94; 8:45 am]

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