New Jersey’s unemployment rate was recently calculated to be 7.4 percent - one of the highest in the country. Job loss is one of the more trying situations to grapple with in a New Jersey divorce, particularly if the one suddenly out-of-work is the higher earner. This factor can substantially impact alimony, child support, and equitable division of assets.
However, one’s current income is only part of the equation considered by the Court when making these key family law decisions. Also under the microscope is one’s earning capacity. As our Bergen County divorce lawyers can explain, earning capacity involves the career opportunities one has based on their education, skills, experience, health, and local job market. They’ll look not only at your job history, but the odds of landing a similarly-earning position with a little effort.
One of the first questions the Judge is likely to ask is: Why did the job loss occur? In some cases, it wasn’t the employee’s fault. New Jersey is an at-will employment state, meaning employers have the right to terminate, demote, cut wages, and reduce paid time off for employees without cause - so long as the reason isn’t discriminatory or otherwise in violation of state or federal law. In other situations, the employee was clearly to blame, or maybe even quit intentionally. The Judge may not be very understanding if the wage earner was fired for unethical behavior or appears to have quit to avoid paying child support/alimony. Also under consideration will be the steps taken to actively seek reemployment.
It should be noted that once child support and alimony payments are set, there is no automatic reduction - or increase - of these payments just because one loses their job. In fact, a request to reduce child support or alimony after voluntarily quitting a job will almost always be denied. Courts will impute income to parents who are voluntarily employed or underemployed. To impute the income means to treat that individual as if they’re receiving more income for the purpose of determining their support obligations. On the flip side, Courts are likely to be more forgiving when unemployment/underemployment is the result of being laid off, forced to quit, or an economic recession. Such situations resulting in lost income can be considered a material change in circumstance warranting adjustment of support payments. However, once that person regains full employment, support payments can again be increased.
To substantiate your claims, a Bergen County divorce lawyer may advise bringing on a financial or vocational expert to testify about things like the job market, salary ranges, and employment prospects in the area given one’s experience, education, and skill.
Recently, the New Jersey Appellate Division considered a request for adjusted alimony after the former husband was laid off from his role as a manager at an investment firm. In Giunta v. Fahey, the pair divorced following a 16-year marriage, both in their 50s. The husband had maintained work in the financial industry for decades, and was ordered to pay $30,000 annually in limited duration alimony. At the time of the split, he was earning $200,000 - an amount he indicated was a “vast” overpayment because his company matched his salary from a previous employer headquartered in New York City. He was laid off in early 2020, months before the divorce trial started, along with 100 other employees. He received nine months of severance, and said he began immediately searching for a new job, updating his resume, social media accounts, reaching out to industry contacts and several recruiting firms and sending out dozens of applications. As of mid-2020, he hadn’t scored a single interview. Most jobs for which he’d otherwise be qualified required credentials he did not have. Annual salaries at other jobs for which he was qualified were substantially less than he’d been earning. He testified that if/when he did earn a job, he was likely to be paid far less.
At trial, the husband hired a vocational expert. However, rather than providing evidence of the husband’s employability, the witness testified about the wife’s job prospects. According to Court records, she had a degree in business administration and entered the workforce in pharmaceuticals. However, she left a $65,000-a-year-job to raise the couple’s children. At the time of the trial, she was earning $50,000 a year as a receptionist. The husband’s expert witness testified that she was underemployed, given her educational background.
The Judge determined the husband was credible in his doubt about returning to a $200,000-a-year position. He imputed an income of $120,000 salary to the husband, noting alimony could be further modified if unemployment/underemployment persists.
The husband appealed the decision, though, because the Court decided not to impute a higher salary to the wife, sticking inside to her $50,000 earnings.
In affirming the lower Court’s ruling, the Appellate Division further noted the husband had been employed and highly-paid for decades - something that changed only a few months before the divorce trial. It was their view that not enough time had passed for the Court to deem him incapable of snagging another high-paying job. Current earnings, though, haven’t ever been the sole criterion on which one’s obligation for support is based. As to the wife, she’d only recently re-entered the workforce after a decade spent as a stay-at-home parent. Even considering her educational experience, a salary of $50k for a receptionist is “quite generous,” and any assertion that she could easily obtain a higher-paying job absent a great deal of training was “speculative.”
In either case, the Court held that if something major changes - if either party lands a significantly higher-paying job or the husband is unable to secure gainful employment in the general range, they can always ask the Court for a modification.
Contact our Bergen County Divorce Attorneys at (732) 810-0034 to schedule an appointment.