The amount of a child support or spousal support award is based on the actual income of both parties among other factors. However, the Family Code gives the court discretion to modify these support awards by looking at the “earning capacity” of a party who is underemployed or who refuses to work. “Earning capacity” is defined as the amount a party should be able to earn based on his or her talent, skills, training, and experience in a given job market; it is a tool to enable fair support awards despite situations in which a supporting party is not employed to his or her full capacity.
In order to obtain an order imputing income to a party, the person seeking to impute income, the moving party, has the burden to show that the opposing party has a capacity to earn above that which he or she currently earns. Earning capacity is composed of two factors: (a) the ability to work, which includes considerations such as age, occupation, skills, education, health, background, work experience, and qualifications, and; (b) the opportunity to work, which exists when there is substantial evidence of a reasonable likelihood that a party could apply his or her education, skills and training to produce income with reasonable effort. In re Marriage of Regnery (1989) 214 Cal.App.3d 1367. Once the party seeking to impute the other with income shows the ability and opportunity to work, the party seeking to avoid the imputation of income must show that despite reasonable efforts, employment could not be secured.
Originally, the court’s discretion to impute income to a party was limited to instances in which a parent acted in bad faith by reducing or eliminating income. However, the requirement of bad faith is no longer a prerequisite to the imputation of income. In re Marriage of Smith (2001) 90 Cal.App.4th 78. For instance, the court has discretion to find earning capacity and impute income to both a parent who voluntarily terminates employment to a parent who is terminated due to her own misconduct. In re Marriage of McHugh, (2014) 231 Cal.App.4th. 1238. This wide discretion means that it is difficult, if not impossible, for a party to avoid paying a fair support award by declining to be employed at his or her capacity.
The family law attorneys here at Bremer Whyte Brown & O’Meara are well versed in the law related to child and spousal support and handle matters involving imputation of income as a matter of course. Contact Bremer Whyte Brown & O’Meara with your family law questions today.