## Facts

- Dianne Allen worked for Southern California Gas Company as a collection control clerk from 1973 to 1977.
- Southern received a garnishment notice and writ of execution for Allen’s debt to National Business Factors, Inc.
- Southern withheld and remitted amounts from Allen’s pay on two paydays under that writ.
- Southern later received a second garnishment notice and writ of execution on a judgment in favor of Joseph Magnin Company, Inc.
- Allen promptly obtained a release as to the second writ; no wages were withheld under it.
- After receiving the second writ and having made two remittances under the first writ, Southern informed Allen she would be discharged under its policy regarding multiple garnishments; she resigned instead.
- The Secretary of Labor sued, alleging Southern discharged Allen in violation of 15 U.S.C. § 1674(a).

## Issues

1. Under 15 U.S.C. § 1674(a), are an employee’s earnings “subjected to garnishment” upon service/receipt of a legally binding writ, or only when wages are actually withheld?
2. Do multiple wage deductions under one writ for a single creditor constitute garnishment for “any one indebtedness” or more than one indebtedness?
3. Did Southern violate § 1674(a) by discharging (or effectively forcing the resignation of) Allen based on the garnishment activity described?

## Decision

- The Ninth Circuit reversed the district court’s summary judgment for Southern and remanded.
- The court held that, for § 1674(a), earnings are “subjected to garnishment” only when wages are actually withheld pursuant to legal process.
- The court held that multiple withholdings under a single writ for the same underlying debt constitute garnishment for only “one indebtedness.”
- Because no wages were withheld under the second writ and the withholdings that occurred related to a single debt, Southern’s discharge decision violated § 1674(a).

## Legal Principles

- For purposes of 15 U.S.C. § 1674(a), an employee’s earnings are “subjected to garnishment” only when the employer actually withholds wages; receipt or service of a writ alone is insufficient if no withholding occurs.
- “Any one indebtedness” refers to the underlying debt, not the number of pay periods affected or the number of partial remittances made under the same writ.
- Federal law controls the meaning of “garnishment” and “one indebtedness” under the CCPA; state-law rules about when an employer’s duty to withhold arises do not determine when § 1674(a) protection is triggered.
- An employer violates § 1674(a) by discharging an employee based solely on wage withholding for a single debt.

## Conclusion

The Ninth Circuit held that § 1674(a) protects employees from discharge where wage withholding occurred for only one underlying debt, and that a writ that results in no withholding does not, by itself, mean the employee’s earnings were “subjected to garnishment”; Southern’s discharge decision therefore violated the CCPA.


Donovan v. S. Cal. Gas Co., 715 F.2d 1405 (9th Cir. 1983)