NCLC Advocates Praise Gov. Newsom for Signing SB 1477, which reduces wage seizures from workers in debt
WASHINGTON – Advocates from the National Consumer Law Center applaud California Governor Gavin Newsom today for protecting workers and families by signing SB 1477 (Wieckowski). The new law will completely protect a worker who earns $20 per hour from wage seizures for old debt (current law allows over $1,700 to be seized annually from such an earner) and reduce the amount that can be seized from workers who earn more.
Wage seizures happen when a creditor with a court order compels an employer to send it a portion of an employee’s paycheck before the worker ever receives it, forcing working people to forgo necessities like food, medicine, transportation costs, or rent. Currently California protects $600 of disposable earnings per week and allows 50% of wages over that amount to be seized each week. SB 1477 (along with the minimum wage increase scheduled for January 1, 2023) will increase the protected amount to $744 per week and reduce the amount over $744 which can be seized to 40%.
“With Californians being squeezed by high inflation that erodes wages while increasing the cost of necessities, the time was right to increase the amount of wages protected from seizure for old debts,” said Michael Best, staff attorney at the National Consumer Law Center. “We are grateful for Senator Wieckowski’s authorship of the bill and Governor Newsom’s signature on it.”
Protecting wages from seizure advances economic and racial justice. Debts in collection disproportionately impact communities of color. Fifteen percent of Californians have a debt in collections in predominantly white communities, but that rises to 25% in communities of color. Increasing debt collection protections from wage seizure helps reform a debt collection landscape in which people of color are more likely to be contacted by collectors and more likely to be impacted by lawsuits resulting in wage seizure, which widens the racial wealth gap.
“SB 1477 is an improvement that will help keep working consumers from being pushed over a financial precipice and NCLC advocates applaud the Governor and legislature for continuing to improve protections for working consumers,” Best added.