[Federal Register Volume 81, Number 209 (Friday, October 28, 2016)]
[Rules and Regulations]
[Pages 74918-74921]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-26093]


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DEPARTMENT OF LABOR

Office of the Secretary

29 CFR Part 20

RIN 1290-AA27


Administrative Wage Garnishment Procedures

AGENCY: Office of the Secretary, Labor.

ACTION: Final rule.

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SUMMARY: This rule will allow the U.S. Department of Labor (Department) 
to garnish the disposable wages of non-federal workers who are indebted 
to the Department without first obtaining a court order. It implements 
the administrative wage garnishment provisions contained in the Debt 
Collection Improvement Act of 1996 (DCIA) in accordance with the 
regulations issued by the Secretary of the Treasury.

DATES: This final rule is effective on October 28, 2016.

FOR FURTHER INFORMATION CONTACT: Shelia Alexander, Office of the Chief 
Financial Officer, (202) 693-4472; or Rachel Rikleen, Office of the 
Solicitor, (202) 693-5702.

SUPPLEMENTARY INFORMATION:

I. Debt Collection Improvement Act Requirements and Background

    Section 31001(o) of the Debt Collection Improvement Act of 1996 
(DCIA), which is codified at 31 U.S.C. 3720D, authorizes federal 
agencies to use administrative procedure to garnish the disposable pay 
of an individual to collect delinquent non-tax debt owed to the United 
States in accordance with regulations promulgated by the Secretary of 
the Treasury. Wage garnishment is a process whereby an employer 
withholds amounts from an employee's wages and pays those amounts to 
the employee's creditor pursuant to a withholding order. Under the 
DCIA, agencies may garnish up to 15% of a delinquent non-tax debtor's 
disposable wages. Prior to the enactment of the DCIA, agencies were 
generally required to obtain a court

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judgment before garnishing the wages of non-Federal employees.
    The DCIA requires the Secretary of the Treasury to issue 
regulations implementing the administrative wage garnishment 
requirements. These implementing regulations, which are at 31 CFR 
285.11, provide for due process for nontax debtors and require agencies 
to publish regulations for administrative wage garnishment hearings. 
Pursuant to 31 CFR 285.11(f), federal agencies must either prescribe 
regulations for the conduct of an administrative wage garnishment 
hearing consistent with the procedures set forth in section 285.11 or 
adopt section 285.11 without change by reference. Through this rule, 
the Department has decided to issue its own regulations consistent with 
the procedural requirements of section 285.11.
    This final rule governs only administrative wage garnishment. 
Nothing in this regulation precludes the use of collection remedies not 
contained in the regulation. The Department and other federal agencies 
may simultaneously use multiple collection remedies to collect a debt, 
except as prohibited by law.
    The Department may, but is not required to, promulgate additional 
policies, procedures, and understandings consistent with this 
regulation and other applicable Federal laws, policies, and procedures, 
subject to the approval of the Department's Chief Financial Officer or 
their delegate. The Department does not intend for its components, 
agencies, and entities to be able to adopt different policies, 
procedures, or understandings.

II. Discussion of Comments

    In response to its Interim Final Rule (IFR) concerning 
Administrative Wage Garnishment (80 FR 60797 October 8, 2015), the 
Department received five comments from private citizens and an industry 
association. The comments focused primarily on three subject areas: The 
justification for the regulation, due process concerns, and the burden 
of proof requirements.
    Two commenters asked why the regulation is necessary, arguing that 
the Department must explain why the current debt collection tool are 
insufficient. The Department has determined that it is legally 
obligated to prescribe regulations for the conduct of 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.'' This regulatory obligation is 
what necessitates this final rule. No changes were made to the final 
rule in response to the comments received regarding the regulation's 
justification.
    The Department received four comments raising concerns related to 
due process. In general, these comments argued that garnishing wages 
through an administrative process, instead of through the courts, would 
remove protections for debtors and may cause unnecessary hardships to 
impoverished individuals. The Department has determined the regulation 
protects due process rights that must be afforded to a debtor when an 
agency seeks to collect a debt, including the ability to verify, 
challenge, and compromise claims, and provide access to administrative 
appeals procedures. Under section 20.205, debtors must be notified of 
the potential of a wage garnishment. Under section 20.206, a hearing 
must be held prior to the issuance of a withholding order if the debtor 
submits a timely request. The Department will provide the debtor with 
an opportunity to inspect and copy records related to the debt, and to 
establish a repayment agreement under section 20.205. All of these 
requirements protect the due process rights of the debtors, and, as a 
result, no changes have been made to the final rule in response to 
comments received.
    As for concerns about imposing untenable burdens on debtors, the 
proposed rule included multiple provisions to protect against this 
outcome. For example, under section 20.210, the Department 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. Additionally, section 20.209 sets out clear limits 
on the amounts the Department may seek to garnish, and section 20.211 
allows the debtor to request adjustments to the garnishment based on 
new financial hardships. The Department has determined that these 
protections are sufficient to ensure that no undue burden is put on 
impoverished debtors.
    One commenter indicated the rule should be modified to require ``an 
oral, in-person, face-to-face meeting.'' Currently, under section 
20.20.206, a hearing may be conducted in writing, by telephone or other 
communications technology, or in person. The commenter was concerned 
that anything other than a face to face meeting would fail to 
demonstrate the individuals' situation and would harm the process. 
Under 31 CFR 285.11(f)(3)(ii), ``[a]ll travel expenses incurred by the 
debtor in connection with an in-person hearing will be borne by the 
debtor.'' The Department has determined requiring debtors to appear in-
person would constitute an unconscionable financial burden on debtors 
and serve as an unreasonable obstacle to appropriate disputes. The 
Department notes that in-person hearings are not required to ensure 
that due process is served. As a result, no changes have been made to 
the final rule in response to comments received.
    Finally, one commenter raised a concern about the burden of proof 
requirements found in section 20.206(f). The commenter contends that 
the section does not describe requirements for what documentation the 
Department must produce to ``establish the existence of the debt and 
the amount of the debt'' and that more information would be necessary 
for a court-ordered garnishment. Under section 20.206(f), the 
Department will have the initial burden of proving, by a preponderance 
of the evidence, the existence or amount of the debt by submitting a 
certified copy of the adjudication or other document. By requiring this 
documentation, the Department has set a standard for the kind of 
document that will be acceptable to meet its burden of proof. This 
documentation requirement is equivalent to the proof that would be 
needed in some courts for a garnishment order. Additionally, this rule 
parallels existing regulations of other agencies, including the 
Department of the Treasury, those promulgated by other Federal 
agencies, and the Federal Claims Collection Standards (FCCS), as 
required by the Debt Collection Improvement Act of 1996.

III. Summary of Key Aspects of the Rule

    This rule allows the Department to initiate proceedings 
administratively to garnish the wages of a delinquent debtor. It 
applies to debts owed to the Department or in connection with any 
program administered by the Department. The administrative wage 
garnishment process will be applied consistently throughout the 
Department.
    The Department can enter into agreements, such as memoranda of 
understanding, with other Federal agencies permitting that agency to 
administer part or all of the Department's administrative wage 
garnishment process. Nothing in this regulation requires the Department 
to duplicate notices or administrative

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proceedings required by contract, this regulation, or other laws or 
regulations. Thus, for example, the Department is not required to 
provide a debtor with two hearings on the same issue merely because two 
different collection tools are used, each of which requires that the 
debtor be provided with a hearing.
    Section 20.205 lists the notice requirements, which includes an 
explanation of the debtor's rights. The debtor is allowed to inspect 
Department records related to the debt, enter into a written repayment 
agreement, and have a hearing.
    Under section 20.206, a debtor can request one of two types of 
available hearings--a paper hearing or an oral hearing. The format of 
oral hearings is not limited to in-person and telephone hearings, it 
may include new forms of technology. The hearing official has the 
authority to determine the kind of hearing and the amount of time 
allotted each hearing.
    If a hearing is held, the Department can meet its initial burden by 
offering documentation, including a copy of the debt adjudication, 
which demonstrates the existence of the debt and its amount as is 
required under section 20.206(f). Once the Department has established 
its prima facie case, the debtor can dispute the existence or amount of 
the debt. For example, debtors can meet their burden by demonstrating 
that they are not the person who owes a debt to the Department, that 
they have not received payments from the Department or have not been 
fined by the Department, or that they have already paid the debt.
    Additionally, the Federal Employees Compensation Act (FECA), 5 
U.S.C. 8101-8193, contains a provision that precludes administrative 
and judicial review of agency determinations, which normally includes a 
repayment schedule. As a result, for hearings related to FECA debts, 
once the Department has made its prima facie case, the debtor has only 
two limited grounds on which he or she can demonstrate that an 
administrative wage garnishment is not appropriate. The debtor may not 
challenge the underlying merits of the determination that created the 
debt.
    Section 20.207 outlines the timing and elements of the withholding 
order to the debtor's employer. Pursuant to section 20.208, employers 
must complete and return a certification noting, in addition to other 
information, that they have received the withholding order and 
verifying the debtor's employment.
    Section 20.209 describes how much the Department can withhold 
through administrative wage garnishment, which is up to 15% of the 
debtor's disposable pay, and the employer's administrative wage 
garnishment duties. A withholding order for family support would always 
have priority over an administrative wage garnishment order. If there 
are multiple federal garnishment orders, priority depends on which 
garnishment order was first obtained. When a debtor's disposable pay is 
already subject to one or more withholding orders with higher or equal 
priority with the Department's administrative wage garnishment order, 
the amount that the employer must withhold and remit to the Department 
would not be more than an amount calculated by subtracting the 
amount(s) withheld under the other withholding order(s) from 25% of the 
debtor's disposable pay. For example, if the employer is withholding 
20% of a debtor's disposable pay for a family support or prior 
withholding order, the amount withheld for the subsequent withholding 
order issued under this section is limited to 5% of the debtor's 
disposable pay. When the family support or prior withholding order 
terminates, the amount withheld for the subsequent withholding order 
issued under this section may be increased to 15%.
    Finally, sections 20.210 and 20.211 provide protections to 
employees that are facing financial hardships. Section 20.210 prohibits 
the Department from garnishing the wages of a debtor who was 
involuntarily separated from employment. The debtor has the obligation 
under this section to inform the Department of the involuntary 
separation. Section 20.211 outlines how a debtor can request a review 
of their garnishment due to materially changed circumstances that have 
created a financial hardship.

IV. Compliance With Statutory and Regulatory Requirements for 
Rulemakings

    The Administrative Procedure Act. The Department has determined 
this rule involves an agency procedure or practice, and therefore no 
notice of proposed rulemaking is required under the Administrative 
Procedure Act (APA) at 5 U.S.C. 553(b)(A) and (B).
    This 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 Department has 
determined that prior notice and public comment procedures would be 
unnecessary pursuant to 5 U.S.C. 553(b)(B).
    The Paperwork Reduction Act. The Department has determined that the 
provisions of the Paperwork Reduction Act of 1995, as amended, 44 
U.S.C. 3501, et seq., do not apply to any collections of information 
contained in this rule because any such collections of information are 
made during the conduct of administrative action taken by an agency 
against specific individuals or entities. 5 CFR 1320.4(a)(2). In the 
IFR, the Department specifically invited comments about this 
determination, but none were received.
    The Regulatory Flexibility Act. The Regulatory Flexibility Act 
(RFA), Public Law 96-354, as amended (5 U.S.C. 601 et seq.), requires 
administrative agencies to consider the effect of their actions on 
small entities, including small businesses. As a procedural rule, the 
requirements of the RFA pertaining to regulatory flexibility analysis 
do not apply. However, even if the RFA were to apply, the Department 
certifies that this rule will not have a significant impact on a 
substantial number of small entities as defined in RFA. Although small 
entities will be subject to this regulation and to the certification 
requirement in this rule, the requirements will not have a significant 
economic impact on these entities. Employers of delinquent debtors must 
certify certain information about the debtor such as the debtor's 
employment status and earnings. This information is contained in the 
employer's payroll records. Therefore, it will not take a significant 
amount of time or result in a significant cost for an employer to 
complete the certification form. Even if an employer is served 
withholding orders on several employees over the course of a year, the 
cost imposed on the employer to complete the certifications would not 
have a significant economic impact on that entity. Employers are not 
required to vary their normal pay cycles in order to comply with a 
withholding order issued pursuant to this rule.
    Unfunded Mandates Reform Act. Title II of the Unfunded Mandates 
Reform Act of 1995 (UMRA), Public Law 104-4, requires Federal agencies 
to assess the effects of their regulatory actions on state, local, and 
tribal governments or the private sector. This rule contains no Federal 
mandates, as defined by Title II of the UMRA, for State, local, and 
tribal governments or the private sector. Therefore, this rule is not 
subject to the requirements of sections 202 and 205 of UMRA.

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    Executive Orders 12866, 12988, and 13132. This rule is not a 
significant regulatory action as defined in Executive Order 12866. The 
rule has been reviewed in accordance with Executive Order 12988. This 
rule preempts state laws that are inconsistent with its provisions. 
Before a judicial action may be brought concerning this rule or action 
taken under this rule, all administrative remedies must be exhausted. 
This regulation will not have a substantial direct effect on the 
states, on the relationship between the national government and the 
states, or on distribution of power and responsibilities among the 
various levels of Government. Therefore, in accordance with E.O. 13132, 
it is determined this regulation does not have sufficient Federalism 
implications to warrant the preparation of a Federalism Assessment.

List of Subjects in 29 CFR Part 20

    Administrative wage garnishment, Debt collection, Labor.

    Signed at Washington, DC, on this 17th day of October, 2016.
Thomas E. Perez,
U.S. Secretary of Labor.

PART 20--FEDERAL CLAIMS COLLECTION

0
Accordingly, the interim rule amending 29 CFR part 20 which was 
published at 80 FR 60797 on October 8, 2015, is adopted as a final rule 
without change.

[FR Doc. 2016-26093 Filed 10-27-16; 8:45 am]
 BILLING CODE 4510-7C-P