This article was posted on Thursday, Dec 01, 2022

SACRAMENTO — Low and middle-income Californians who are struggling to keep up with back-due debt will be able to retain a greater share of their paychecks to avoid falling deeper down a financial hole under legislation signed today by Governor Gavin Newsom.

SB 1477, authored by Senator Bob Wieckowski (D-Fremont), will provide important relief for struggling Californians who are dealing with rising prices, high rents and the lasting effects of the COVID pandemic. 

“California has the highest cost of living in the nation and nearly one-third of its residents in communities of color have a debt in collections,” said Wieckowski, a member of the Senate Judiciary Committee and a bankruptcy attorney. “This bill updates our wage garnishment formula to make sure more workers on shoestring budgets can keep a few more dollars of their take-home pay to cover groceries, medical expenses or school supplies. It will provide meaningful assistance to thousands of families across the state. I applaud Governor Newsom for helping to put these families on stronger footing as they pay down their debt.”

How and When

SB 1477’s updates to the wage garnishment formulas will begin in September 2023. The bill does not eliminate a debtor’s legal obligation to pay a debt, but it adjusts the formula. For example, a middle-income earner with two children, making the median income for Sacramento County, would be able to keep an additional $99 in their paycheck.

The Legislature last adjusted the wage garnishment formulas in 2015 when it passed Sen. Wieckowski’s SB 501. Since that adjustment took effect in July 2016, California’s Consumer Price Index increased by 21.7 percent.

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“Too many Californians continue to live paycheck to paycheck and often can’t afford having their wages garnished,” said Christopher Sanchez, policy advocate for Western Center on Law and Poverty, a co-sponsor of the bill. “We applaud the Governor’s action today and thank Senator Wieckowski for his leadership on SB 1477 to protect the wages of working Californians who are already facing economic hardship. These protections ensure that workers are able to be whole and don’t have to worry if they are going to be able to keep food on the table or a roof over their head.”

Wage garnishment, where collectors with a court order force an employer to send them a large share of a worker’s paycheck before they ever see it, is very harmful to low-income people and middle-class workers in high-cost regions of the state. Roughly a half-million Californians experience wage garnishment annually. Almost two-thirds of debt collection cases result in default judgments in favor of the debt collectors, who are often large, national corporations. One study found 98 percent of defendants did not have legal representation.

A study reviewed the 20 largest debt buyers in the 10 most populous counties in California and found the average wage collection was about $6,000. During a five-year period last decade, $140 million was garnished annually in just those 10 counties, illustrating the large amount of money involved.

Senator Wieckowski’s bill is cosponsored by the National Consumer Law Center, Western Center on Law and Poverty and Public Law Center.

SB 1477 is a part of the Building the California Dream Alliance priority legislation package. The Alliance was founded in 2015 to offer a counterbalance to the influence of anti-worker, anti-environment and special interest policies.

Senator Wieckowski represents the 10th Senate District, which includes southern Alameda County and parts of Santa Clara County.