I have heard on more than one occasion from a client that their spouse or ex-spouse isn’t earning nearly as much income as he/she may be capable of earning. This statement is often made in the face of an alimony or child support calculation. What happens if this is in fact true?
During the divorce process one of the more common ways to determine how much income a spouse can earn is to have them evaluated by an employability expert. Now if you look up “employability expert” as a qualified profession or a course of study available in a college course book, I doubt that you would find it in there. Like many other things, employability experts arose out of a need in the legal profession to have an individual with the proper experience, knowledge and background meet with an individual and assess their skill set to determine what kind of employment they may be eligible to obtain. Viola- a new niche profession is born!
So what about after a divorce is finalized and an ex-spouse is either unemployed (because of the economy, the job market or they simply refuse to work) or is underemployed (earning less than they had previously earned either by choice or no fault of their own) and a support obligation exists? What does the court then rely upon when addressing the recalculation of a support award?
The Appellate Division, in the recent unpublished decision of Bakalian v. Bakalian, A-4773-07T1, decided October 21, 2009, revisited this issue. In this case, the ex-husband appealed, in part, from the trial court’s Order that imputed income to him as well as objecting to the way in which the trial judge reached the imputed income number.
Imputed income- what’s this? In simplest terms- imputed income is income that is ascribed to an individual as the amount of money they could be earning, if they either chose to work or chose to find employment similar to their past employment and/or earnings.
In Bakalian, where the parties were both employed in the medical field but where child support had to be recalculated because the parties’ son decided to live with husband, however hehad given up his chiropractic practice after the death of the parties’ 16 year old daughter because he “could not get out of bed in the morning”, had to deal with the legal issues stemming from his divorce, and he had raise the parties’ other child, a 17 year old son.
The trial judge used the New Jersey Department of Labor statistics (NJDOL) in coming up with a comparable salary for husband if he had in fact been working and imputed that number to him when recalculating the child support obligation.
The Appellate Court affirmed the trial judge’s imputation of income and methodology used to determine the amount imputed. First, the Court noted that a trial judge’s decision to impute income won’t be changed unless the underlying facts to do so are either contrary or unsupported by the available evidence.
That said, the Court went on to hold that whenever a parent remains unemployed or underemployed without a good reason, imputing income allows for a fair and just determination of child support. In doing so, the potential earning capacity should be taken into consideration in the support calculation. The first part of this analysis requires a determination by the trial judge that the parent has good reason to be voluntarily unemployed. To make that decision, the judge needs to consider the employment status and earning capacity of that parent if the family had stayed together, as well as the reasons for the voluntary unemployment or underemployment.
As for the methodology used to determine the imputed income, the New Jersey Rules of Court provide guidance for this process, once a court decides that a party does not have good cause for being unemployed. These three options are listed in descending order of priority:
1). Impute income based on potential employment and earning capacity using the parent’s work history, occupational qualifications, educational background, and prevailing job opportunities in the region. The court may impute income based on the parent’s former income at that person’s usual or former occupation or the average earnings for that occupation as reported by the NJDOL;
2). If potential earnings can’t be determined, impute based on the parent’s most recent wage or benefit record; or
3). If a NJDOL wage or benefit record is not available, impute income based on the full-time employment (40 hours) at the NJ minimum wage ($7.15 per hour).
As you can see, courts don’t simply guess a number when making these determinations. If you are going through a divorce or have an ex-spouse who you believe is voluntary unemployed or underemployed and support (either spousal or child) is an issue in your case, take the above considerations to heart.