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Administrative Wage Garnishment

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Federal Trade Commission.


Final rule.


This final rule establishes debt collection regulations for the Federal Trade Commission (“FTC” or “Commission” or “agency”) to conform to the Debt Collection Act of 1982, as amended by the Debt Collection Improvement Act of 1996, the Federal Claims Collection Standards, and other laws applicable to the collection of nontax debts owed to the FTC.


This final rule is effective December 8, 2010.

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Ami Joy Rop, Attorney, Division of Planning and Information, at; telephone number 202-326-2648 (Note: this is not a toll-free call); or write to: Federal Trade Commission, 600 Pennsylvania Avenue NW., Washington, DC 20580.

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I. Background

This final rule implements the FTC's debt collection regulations to conform to the Debt Collection Act of 1982, Public Law 97-365, 96 Stat. 1749 (Oct. 25, 1982), as amended by the Debt Collection Improvement Act of 1996 (DCIA), Public Law 104-134, 110 Stat. 1321, 1358 (Apr. 26, 1996), the Federal Claims Collection Standards, 31 CFR parts 900 through 904, Debt Collection Authorities Under the Debt Collection Improvement Act of 1996, 31 CFR part Start Printed Page 68417285, and other laws applicable to the collection of nontax debt owed to the Government.

Section 31001(o) of the DCIA (codified at 31 U.S.C. 3720D) authorizes collection of Federal agency debt by administrative wage garnishment. Wage garnishment is a process whereby an employer withholds amounts from an employee's wages and pays those amounts to the employee's creditor in satisfaction of a withholding order. The DCIA authorizes Federal agencies to garnish no more than 15% of the disposable pay of a debtor to satisfy delinquent nontax debt owed to the United States. Prior to the enactment of the DCIA, agencies were required to obtain a court judgment before garnishing the wages of non-Federal employees.

The DCIA directed the Secretary of the Treasury to issue implementing regulations (see 31 U.S.C. 3720D(h)) with respect to administrative wage garnishment. On May 6, 1998 (63 FR 25136), the Department of the Treasury published a final rule implementing the statutory administrative wage garnishment requirements at 31 CFR 285.11. Paragraph (f) of 31 CFR 285.11 provides that “[a]gencies shall prescribe regulations for the conduct of administrative wage garnishment hearings consistent with this section or shall adopt this section without change by reference.” Under the DCIA, the Treasury Department serves as a coordinator for Federal debt collection through its Treasury Offset Program.

This final rule would amend the FTC's regulations at 16 CFR Part 1, Subpart N, to adopt 31 CFR 285.11 in its entirety. Specifically, the final rule would establish a new provision that would contain a cross-reference to 31 CFR 285.11.

II. Overview of the Administrative Wage Garnishment Process

Readers should refer to the Department of the Treasury regulation at 31 CFR 285.11 for details regarding the administrative wage garnishment procedures that would be adopted by this final rule. For the convenience of readers, the following presents an overview of the rules and procedures codified at 31 CFR 285.11.

1. Notice to Debtor

At least 30 days before the agency initiates garnishment proceedings, the agency will give the debtor written notice informing him or her of the nature and amount of the debt, the intention of the agency to collect the debt through deductions from pay, and an explanation of the debtor's rights regarding the proposed action.

2. Rights of Debtor

The agency will provide the debtor with an opportunity to inspect and copy records related to the debt, to establish a repayment agreement, and to receive a hearing concerning the existence or amount of the debt and the terms of a repayment schedule. A hearing, which may be in writing, by telephone, or in person, must be held prior to the issuance of a withholding order if the debtor's request is timely received. For hearing requests that are not received in the specified time frame, the agency need not delay the issuance of a withholding order prior to conducting a hearing. An agency may not garnish the wages of a debtor who has been involuntarily separated from employment until that individual has been re-employed continuously for at least 12 months. The debtor bears the responsibility of notifying the agency of the circumstances surrounding an involuntary separation from employment.

3. Hearing Official

The Department of the Treasury regulations authorize the head of each agency to designate any qualified individual as a hearing official. This final rule would provide that any hearing required to establish the FTC's right to collect a debt through administrative wage garnishment will be conducted by a qualified individual selected by the Chairman of the Commission. The hearing official is required to issue a written decision no later than 60 days after the request for a hearing is made. The hearing official's decision is the final agency action for purposes of judicial review.

4. Employer's Responsibilities

The Treasury Department will send to the employer of a delinquent debtor a wage garnishment order directing that the employer pay a portion of the debtor's wages to the Federal Government. The employer is required to certify certain payment information about the debtor. Employers are not required to vary their normal pay cycles in order to comply with these requirements. Employers are prohibited from taking disciplinary actions against the debtor because the debtor's wages are subject to administrative garnishment. An agency may sue an employer for amounts not properly withheld from the wages payable to the debtor.

5. Garnishment Amounts

As provided in the DCIA, up to 15% of the debtor's disposable pay for each pay period may be garnished. Special rules apply to calculating the amount to be withheld from a debtor's pay that is subject to multiple withholding orders. A debtor may request a review by the agency of the amount being garnished under a wage garnishment order based on materially changed circumstances—such as disability, divorce, or catastrophic illness—which result in financial hardship.

III. Procedural Requirements

A. Administrative Procedure Act

The FTC has determined that implementation of this rule without prior notice and the opportunity for public comment is warranted because this rule is one of agency procedure and practice and therefore is exempt from notice and comment rulemaking requirements under the Administrative Procedure Act (APA) at 5 U.S.C. 553(b)(A) and (B).

This final rule parallels the existing operational regulations of other agencies to effectuate the collection of non-tariff and nontax debts to implement 31 U.S.C. 3711. Because this rule parallels existing, long-standing rules that have already been subject to APA notice and comment procedures, we believe that publishing this rule with the usual notice and comment procedures is unnecessary. Accordingly, the FTC has determined that prior notice and public comment procedures would be unnecessary pursuant to 5 U.S.C. 553(b)(B).

B. Regulatory Flexibility Act

Because the Commission has determined that it may issue these rules without public comment, the Commission is also not required to publish any initial or final regulatory flexibility analysis under the Regulatory Flexibility Act as part of such action. See 5 U.S.C. 603(a), 604(b).

C. Paperwork Reduction Act of 1995

In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3506; 5 CFR part 1320 Appendix A), the Commission has reviewed the final rules. The rules contain no collections of information pursuant to the Paperwork Reduction Act.

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List of Subjects in 16 CFR Part 1

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Authority and Issuance

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For the reasons set forth above, the Federal Trade Commission amends

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1. Amend part 1 by adding a new subpart N (consisting of § 1.100) to read as follows:

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Subpart N—Administrative Wage Garnishment

Administrative wage garnishment.
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Authority: 15 U.S.C. 46; 31 U.S.C. 3720D; 31 CFR 285.11(f).

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Administrative wage garnishment.

(a) General. The Commission may use administrative wage garnishment for debts, including those referred to Financial Management Service, Department of Treasury, for cross-servicing. Regulations in 31 CFR 285.11 govern the collection of delinquent nontax debts owed to federal agencies through administrative garnishment of non-Federal wages. Whenever the Financial Management Service collects such a debt for the Commission using administrative wage garnishment, the statutory administrative requirements in 31 CFR 285.11 will govern.

(b) Hearing official. Any hearing required to establish the Commission's right to collect a debt through administrative wage garnishment shall be conducted by a qualified individual selected at the discretion of the Chairman of the Commission, as specified in 31 CFR 285.11.

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By direction of the Commission.

Richard C. Donohue,

Acting Secretary.

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[FR Doc. 2010-28045 Filed 11-5-10; 8:45 am]