Imputation of Income in Support Cases

Imputation of Income in Support Cases:

One of the recurring issues that come up in divorce or family law proceedings is the refusal or failure by one party (usually the supported party) to work or to work at his or her full potential (i.e. underemployed). This is a common theme that most parties will have to deal with at one point or another during the divorce or family law proceeding (either prior to entry of judgment or in post-judgment proceedings).

When Imputation of Income Issues Can Arise:

This issue can fall in one of the following scenarios:

1. Alleged medical incapacity (I can’t work because I am ill, I have a disability, I am old, etc.)
2. Re-married and “riding the coattails of the subsequent spouse” (my new wife or new husband makes enough money for both of us so I don’t have to work)
3. Caring for the minor children (I have to care for our minor children)
4. Working already but either at a lower rate of pay or less than full time (I already work 20 hours per week)
5. Not working during the marriage or domestic partnership (I didn’t work then so why do I have to work now or I don’t have the necessary skills because I’ve been out of the work force for so long)

Generally, Courts take the parties as they are during the temporary phase of the proceedings, meaning in R.F.O. proceedings for temporary child support or spousal support the Court looks at the parties as they are (current status quo). Judges differ in this approach as some Judges will consider earning capacity at the temporary support phase, while others will defer the issue to the time of trial (where earning capacity can be considered in the context of permanent spousal support and a full analysis of the parties’ marital standard of living under California Family Code Section 4320 can be done when ordering or ruling on the issue of permanent spousal support).

How and When Can the Court Consider Imputation of Income:

So how does a party have the Court consider the supported party’s earning capacity and impute income to the party who is either not working or working at less than his or her full potential?

One method of imputation of income includes an order that the supported party submit to a vocational evaluation by a qualified vocational evaluator who will run a battery of assessments and issue a report both as to (1) the supported party’s ability to earn a certain amount of money and (2) the supported party’s opportunities that are available in the work force, either as of the date the report is prepared or testimony provided to Court. Vocational evaluations are not necessarily cheap running anywhere from $2,000.00 to $3,000.00 not including the payment for testimony in Court (or other expedited work done on the matter by the expert), but they can prove invaluable to getting an income imputation to the supported spouse or partner depending on the facts or circumstances.

The other method of imputation of income is to determine whether the party who may have been previously employed actually left his or her job or is getting paid less than what he or she was previously making, did so intentionally. If so, the Court has the power to impute the lost income or wages to the party who intentionally lost his or her job (i.e. quit) or had a reduction in pay (i.e. voluntary reduction in pay to not have to pay as much support or any support). This is generally determined by subpoenas to the employer and a number of written discovery tools and/or oral depositions (of the party and/or the employer). Now, there are certain guidelines/factors based on the working environment and situation of the parties that Courts can consider in determining whether leaving employment was justified or not.

Determining if the other party is “riding the coattails” of his or her subsequent spouse. The Court has the discretion to determine if one party is simply enjoying the benefits of his or her new marriage by virtue of his or her new spouse’s income without having to work (thereby shifting the burden of child support entirely on the supporting or paying party). In that type of case the Court may likely impute income to the supported spouse. This is generally the case in situations wherein one spouse marries someone who makes significant income and then decides he or she will not work (or quits his or her job). If the burden of child support is then shifted to the other parent exclusively (the supporting or paying parent), with the proper presentation of evidence, the Court can impute the lost wages to the party who is “riding the coattails” of the new spouse.

Presentation of job postings in certain jurisdictions may work to accomplish an imputation of income on the supported party. Some counties, such as Riverside may simply require various job postings consistent with the parties’ skills, training or work history to impute income (if not objected to by the party opposing the imputation of income). Most counties will require “competent” evidence of ability and opportunity and that is generally through a court expert who can provide that information to the Court through his or her testimony (although some exceptions may apply – see below).

Having potential employers come in to testify of a job that a potential employer would offer the supported party may suffice. This was the case (by way of example in real practice) wherein an attorney stated she could not find a job. The spouse who happened to also be an attorney had potential employers (other attorneys and firms) come into Court (who were familiar with wife’s skills in past dealings/cases) testify that they would offer her a job that same day for a certain annual salary. The Court agreed that wife was intentionally not obtaining employment after more than a handful of attorneys/firms came to testify of jobs they would offer her that same day if she accepted the offers. She was imputed with income. That was a particularly interesting case where an expert was not needed due to clever strategies utilized in Court.

Admissions by the supported party that he or she has various skills and that he or she has various opportunities for work to employ those skills may also be enough. This routinely happens during depositions or written discovery wherein the party goes on and on about his or her skills and then when confronted with various postings or job opportunities he or she may testify that he or she would qualify for that particular job. Those same admissions of ability and opportunity may do away with the need to have an expert come in and testify at a hearing or trial. The questions would be posed often in an innocuous way and when put together (from the various discovery tools) in evidence, may likely achieve the same results as having a vocational evaluator in the case.

Exceptions Apply to Imputation Based on the Facts of Each Case:

Unemployed or underemployed spouses or significant others are often highly emotional topics and contested issues, but with the right strategy one can successfully impute or defend against the imputation of income, depending on the individual(s) involved and the facts of the pending matter. There are some cases wherein the Court should not impute income to a supported spouse but it depends based on the specifics of each case and each situation. There is no one general strategy that applies to all cases of a party not working or being under-employed.