Arizona court decisions clarify PDCA’s effect on wage garnishments

As we reported in January 2023, Arizona voters passed Proposition 209 in November 2022, which was codified as the Predatory Debt Collection Act (PDCA) and amended Arizona’s wage garnishment statutes. Once the Act became effective on December 8, 2022, creditors, debtors, and employers (as potential garnishees) were left to question its application to existing judgments versus new judgments and existing garnishments versus new garnishments. Recent Arizona Court of Appeals decisions have provided guidance on the application of the PDCA on wage garnishments. What steps should employers take to understand their wage garnishment obligations under the PDCA and to avoid potential garnishee (employer) liability for failure to properly garnish wages?

PDCA changes to wage garnishments

As a reminder, the PDCA has reduced the amount that may be garnished from a judgment debtor’s disposable earnings (i.e., the amount remaining after deducting from earnings those amounts required by law to be withheld). Under the act, the garnishment may not exceed the smaller of:

• 10% of the disposable earnings; or
• The amount by which disposable earnings for the pay period exceed 120 times the applicable (i.e., likely Arizona) minimum wage (assuming biweekly pay periods).

Note that these exemptions don’t apply to garnishments for support.

Pre-December 2022 judgments, new garnishments