How is Job Loss Treated Under the Alimony Statute?
Sep 15, 2016 | Written by: Share|
Judge Jones of Ocean County recently interpreted amendments to the New Jersey alimony statute that were issued in 2014 regarding loss of employment/reduction to income. This gives us new insight into how other courts may treat similar circumstances.
When the alimony statute was modified in September 2014, some of the changes to the statute included specifics as to the duration of alimony, the impact of cohabitation on alimony, the impact of retirement on alimony, and the impact of job loss on alimony. N.J.S.A. 2A:34-23(k) addresses the situation where the payor of alimony suffers a loss of employment or a significant decrease in income.
In June 2016, the amendments regarding loss of employment/reduction were interpreted by Judge Jones in an unpublished opinion in the case of Mills v. Mills. In the Mills case, the parties were married for thirteen (13) years prior to the divorce. At the time of the divorce, the husband earned approximately $108,000 per year working as a district sales manager for a company selling residential and commercial flooring, while the wife was earning $59,000 per year as a teacher. The parties reached an agreement where the husband would pay the wife limited duration alimony in the amount of $330 per week for eight (8) years, along with child support in the amount of $200 per week pursuant to the child support guidelines. (The parties had 2 children, ages 13 and 11 at the time of the divorce.)
In January 2015, after twelve (12) years working at the same company, the husband lost his job when his employer restructured and eliminated his position. The husband began searching for a new job, and, in April 2015, he received an offer of employment in a similar position for another company in the flooring industry, but earning much less at $70,000 per year plus a $6,000 car allowance. Prior to the matter proceeding to a hearing, the husband earned a year-end performance bonus of $6,000, bringing his annual compensation at his new employer to $82,000.
The husband argued that, at his new income of $82,000, he had suffered a substantial decrease of approximately twenty-five percent (25%) of his prior salary. The wife argued against a reduction in alimony, questioning why the husband lost his employment and stating that it would be a hardship for her if the alimony were decreased. The matter proceeded to a hearing in which both parties testified. The husband testified that his prior employment started at approximately $50,000 per year and, over the course of twelve (12) years, he was able to work his way up the ladder and increase his income. He contended that he was not able to find a job making the same income and he would need to work his way up once again.
The court analyzed the prior case law before the 2014 alimony statute amendments, and also analyzed whether the 2014 alimony statute amendments should apply to this case since it had been settled prior to the amendments. The court created a two-step inquiry, which was in accord with the prior case law and the new statutory language: “a) first, was the supporting spouse’s choice in accepting a particular replacement employment opportunity objectively reasonable under the totality of the circumstances? b) if so, what, if any, resulting support adjustment should occur that is fair and reasonable to both parties given their respective situations?”
The court found the husband made legitimate efforts to obtain new employment in the same or similar field and his decision to accept a lower paying job was reasonable and appropriate under the circumstances. Then, after considering the parties’ financial circumstances and the criteria under the alimony statute, the court decreased the husband’s alimony obligation by $80 per week, from $330 to $250 per week. The court found that both parties will likely suffer financial stress because of the reduction in income, but such stress and burdens would be fairly placed on both parties. While in the court’s decision there was no discussion of the parties’ actual budgets or financial circumstances, in comparing the parties’ incomes after the new alimony payment, the husband would have $69,000 per year gross before payment of child support and the wife would have $72,000 per year gross prior to receiving child support. The court recalculated child support because of the husband’s lower income and lower alimony payment. As a result, the new calculations provided a child support reduction of $6 per week.
In addition to reducing the alimony and child support, the judge included an additional provision in the order. If there are any changes in the husband’s employment or income structure, he will notify the plaintiff in writing within thirty (30) days. In addition, each party will provide proof of the prior year’s income, the husband by January 30 of each calendar year and the wife by May 1 of each calendar year.
The court determined that the 2014 amended alimony statute applied to this case because (1) there was no specific language in the parties’ agreement addressing the husband’s loss of employment and (2) there was no prior adjudication by the court as to the loss of employment issue in the Mills case.
The court also noted that, even if it had analyzed the case under the case law prior to the amendment of the alimony statute, the husband still demonstrated a significant change of circumstance to warrant the modification of support.
Judge Jones provided a logical analysis of the law as it is currently applied to the loss of employment under the alimony statute. It is anticipated that other judges will apply a similar type of analysis in deciding applications to reduce alimony based on loss of employment.
If you have any questions in regard to a reduction of alimony or other family law issues, please contact me via email or by calling 908-735-5161.