Wage Garnishment

[d3ranch]

My daughter worked for the state fair in colorado as a contract employee. They kept all the money that she earned ($80) for student loans that are outstanding. Can they keep all her contract wages for this?

[PattyPA]

First of all, there is no such thing as a "contract employee". She was either an independent contractor (no taxes withheld and 1099 will be issued) or an employee (taxes withheld-at least FICA/Medicare and W-2 will be issued).

Secondly, she earned only $80 gross? Had she worked there before? Reason I'm asking is that, unless the company already had an order on file from previous employment, there is absolutely no way the collection agency would 1) know she worked there and 2) get a garnishment order to the employer during her (I'm assuming) one week of employment.

http://www.ed.gov/offices/OSFAP/DCS/awg.html

[d3ranch]

This was for 2 days and it was as a contract she signed with the colorado state fair. It was for an event at the state fair. She did work there last year under the same type situation. her total contact pay was to be $80. (I believe they receive 1099) They kept the entire monies due to her and gave her a statement stating that they were keeping the money for an outstanding student loan. The state fair is a state ran event as far as I know. She has an infant child that she is trying to support and she did this job to help her income. She recieves very little help from the father.

[PattyPA]

If you read the link I provided, you will see that student loan garnishments are limited to 15% of gross income. Also, I'm not convinced that she should have been treated as an IC instead of an employee. If I were her, I would file a claim with the state DOL for improper deduction from wages. That will also bring the IC vs employee issue to light.