Nicole Levy explores a recent Appeals Court decision that makes it easier for employees who are fired or resign due to workplace misconduct to obtain a reduction in child support or alimony.
When a party loses his or her job, or accepts a lower paying job and this affects his or her ability to pay an alimony or child support order, the question of income attribution arises, and a court must decide whether the alimony or child support should be lowered due to the party’s job loss or decreased earnings.
A new decision from the Massachusetts Appeals Court, Emery v. Sturtevant(2017), could change how courts in Massachusetts treat support-paying parties who voluntarily leave a job to accept another position at lower pay. Like other recent cases involving income attribution, the Emery decision tends to favor the party experiencing a decrease in income. The decision will make it more difficult for Massachusetts Probate and Family Courts to force parties with decreased earnings to continue paying alimony or child support based on the party’s historical levels of earnings.
Child support and alimony are often contentious issues during and after a divorce. Because both forms of support are based on the respective earnings of each party, how much a party earns is often a crucial question in family law cases. We all know that nothing guarantees that a person will experience constant earnings growth during his or her lifetime. People venture into new careers, industries rise and fall, and individuals experience personal setbacks that affect their work, ranging from health problems to workplace misconduct and firings.
Table of Contents for this Blog:
- Income Attribution: When Reduced Earnings Do Not Result in Reduced Alimony or Child Support Obligations
- What Happened in Emery: A Work-Place Affair with Subordinate Results in Husband’s Resignation from Prestigious Post
- The Emery Trial: Husband Ordered to Pay $169,572 Per Year in Combined Alimony in Child Support Despite Being Unemployed for Previous Year
- Held in Contempt: Emery Husband’s Inability to Pay Argument is Rejected as Alimony Arrears Top $100,000
- Income Attribution: Can a Party Earn More Through Reasonable Efforts?
- Emery Changes Income Attribution Analysis: Appeals Court Cautions Strongly Against Income Attribution for Parties who are Fired or Forced to Resign from a Job
- Emery on Appeal: Appeals Court Rejects Lower Court’s Child Support and Alimony Orders Where Husband Made Reasonable Efforts in Job Search Following Resignation
- A Widely-Held Belief Among Judges: A Party Who is Fired for Employee Misconduct Should Not Receive a Reduction in Child Support or Alimony
- The Bigger Picture After Emery: The Current Employment Prospects of a Party are More Important than How Their Last Job Ended
- A Strange Byproduct: A Party’s Workplace Misconduct Might Help His or Her Case Under Emery
- Another Detail: Under Emery, a Party is Not Obligated to Keep Searching for a Higher Paying Work After Finding an Appropriate Job
- Practical Considerations: Expert Testimony More Important Than Ever in Income Attribution Cases
Income Attribution: When Reduced Earnings Do Not Result in Reduced Alimony or Child Support Obligations
When a support-paying party’s income increases, the support recipient may seek an increase in alimony or child support by filing a complaint for modification. Similarly, when a party’s income decreases or disappears, a court must decide if a decrease in support is warranted. When a party’s income decreases due to voluntary job loss or his or her failure to seek full employment, the issue of income attribution arises. In Massachusetts, a probate and family court judge may attribute income to a party who is voluntarily earning less than he or she could through “reasonable efforts”.
Frequently, income attribution cases focus on whether a party’s loss of income or employment was “voluntary”. Thus, a highly-paid executive who chooses to pursue his painting hobby as a career might be prevented from paying lower child support or alimony. More difficult cases involve parties who are fired or resign due to workplace misconduct. If a party is fired due to particularly egregious workplace misconduct, should a court treat the job loss as “voluntary” and require the party to continue paying full child support alimony – despite the job loss – under an income attribution theory? The Emery decision answers this question with more clarity than previous Massachusetts decisions. The opinion suggests that attributing income to a party who was fired or resigned due to misconduct or poor performance will only be proper if the party fails to make reasonable efforts to obtain new work after the firing.
What Happened in Emery: A Work-Place Affair with Subordinate Results in Husband’s Resignation from Prestigious Post
In many ways, Emery v. Sturtevant started out as a typical divorce case. At the time of the divorce, in 2011, the husband was the head of the Northfield Mount Hermon School, where he earned $350,000 in salary, along with annual bonuses, deferred compensation, tuition waivers for his children, dining services through the school, the use of a vehicle, and free housing in a mansion that was maintained, for free, by the school. In all, the value of the husband’s compensation was more than $450,000, and he was contracted to work in his position through June, 2012.
In early 2011, however, everything changed. In April, it emerged that the husband had been having an extramarital affair with a subordinate at the school. On May 3, 2011, the husband resigned from his position, sending a letter of resignation to the chairman of the school’s board of trustees. His wife subsequently filed for divorce.
The case was scheduled for a two-day trial in May, 2012, which was about the time that the husband’s severance package – equal to one year of his $350,000 salary, along with some small side benefits – was set to expire. The trial was scheduled to take place in the Franklin Probate and Family Court, where it would be heard by Hon. Stephen M. Rainaud. At trial, the husband made the risky decision to represent himself, while the wife was represented by counsel.
The Emery Trial: Husband Ordered to Pay $169,572 Per Year in Combined Alimony in Child Support Despite Being Unemployed for Previous Year
Following the trial, the judge entered a judgment that was decidedly in the wife’s favor, ordering the husband to pay weekly child support of $780 and weekly general term alimony of $2,481 to the wife, based on income that the judge attributed to the husband that equaled to $542,672 per year, despite the husband’s full year of unemployment leading up to trial. As is typically the case in probate and family court, however, several months passed between the last day of trial (May 2012) and the judge’s entry of a written Judgment of Divorce (June 18, 2012). Indeed, something important happened between the end of trial and the entry of the judge’s decision: the husband got a job.
In the month between the end of the trial and the entry of the divorce court’s judgment, the husband got a new job after a long and arduous job search. However, the new job was in Cincinnati and only paid $135,000; a small fraction of his prior earnings, which had once topped $450,000 per year. The Judgment of Divorce dated June 18, 2012 required the husband to pay combined alimony and child support of $169,572 per year – an amount that significantly exceeded the husband’s total pretax earnings at the new job in Cincinnati.
On July 24, 2012, less than six weeks after the entry of Judgment of Divorce, the husband filed a Complaint for Modification seeking a reduction in his alimony and child support obligations based on earnings from the new job. On October 24, 2013, more than one year later, the judge dismissed the husband’s complaint for modification, ordering the husband to continue paying combined child support and alimony of $169,572 per year while earning just $135,000 per year. At roughly the same time, the judge held that the husband owed the wife $90,710.91 in past due alimony arrears since the entry of judgment.
Held in Contempt: Emery Husband’s Inability to Pay Argument is Rejected as Alimony Arrears Top $100,000
When husband failed to pay this sum, a contempt trial was held in which the husband argued he should not be held in contempt for failure to pay alimony based on the normally valid defense that the husband lacked the ability to pay the amount due. However, a new judge held the husband in contempt, and recalculated the arrears at $113,924.13 as of March 20, 2014.
The Appeals Court summarized the probate and family court judge’s reasoning for imposing the original child support and alimony obligations on the husband as follows:
Here, the husband sought a downward modification of his alimony and child support payments on the basis that his income from [the Cincinnati school] was substantially lower than his income at the time of the divorce. However, the divorce judge concluded that the husband was not entitled to modification because his decision to resign from [Northfield Mount Herman “NMH”], and the resulting reduction in his income, was “voluntary.” The judge found that because the husband “was earning less at the time of the [modification] trial . . . than prior to the divorce by his own choosing,” it was appropriate to attribute income to the husband consistent with his prior NMH salary.
The husband appealed the dismissal of his complaint for modification and the subsequent contempt judgment, and the case went to the Appeals Court. Before we explore the Appeals Court decision below, it is worth reviewing the law of income attribution in Massachusetts.
Income Attribution: Can a Party Earn More Through Reasonable Efforts?
As we discussed in our prior post on income attribution in child support and alimony cases, divorce courts in Massachusetts can attribute income to parties who claim they cannot make their child support or alimony payments if the court finds that the party has chosen to earn less money than he or she could through reasonable job-seeking efforts:
[I]f a judge determines that a party is earning less than he or she could by way of reasonable efforts, the judge may (but not must) consider the party’s potential earning capacity rather than his or her actual earnings. Either party can face an order for attribution in a support case. However, attribution most commonly arises when a judge determines that the support provider, and not the recipient, is voluntarily earning less than he or she could through reasonable efforts.
To attribute income, the central inquiry the judge must examine is whether that party is capable of earning a higher income through reasonable effort. In determining whether someone’s earning potential is higher than their actual income, courts have routinely looked to whether a party voluntarily changed their job to a lower-paying one or if a party failed to seriously pursue a new job of equal pay following a job loss. If the court finds that either scenario has led to a party earning less than he or she could through reasonable efforts, then the court may attribute income to a party.
(It is important to note here that income attribution often arises in modification proceedings, when a party seeks to reduce an existing child support or alimony order based on decreased earnings. However, income attribution is also common at the outset of a child support or alimony case. For example, if a party shows high earnings in the last three years, but claims a steep decline in income at the time that alimony or child support is being set, then the court may attribute income to the party. In other words, income attribution is not strictly limited to modification cases. It arises anytime a court determines that a party could be earning greater income through reasonable efforts.)
Emery Changes Income Attribution Analysis: Appeals Court Cautions Strongly Against Income Attribution for Parties who are Fired or Forced to Resign from a Job
In the real world, we all know that there is often a fine line between leaving a job involuntarily versus of your own free will. Bad bosses, nasty co-workers, looming job cuts and changes in working conditions can all make a once-decent job intolerable. Conversely, sometimes an employee’s own actions make continued work untenable. The classic situation goes like this: the boss calls you into her office, points out some flaw in your performance, and suggests you start “looking for another job”. Maybe she even offers to give you a decent referral if you leave voluntarily. Compared to being fired, leaving voluntarily is a no-brainer. For parties faced with child support alimony obligations, the situation is not always so simple, unfortunately.
A common gray area in Massachusetts has been when a party’s “voluntary” bad conduct at work – i.e. having an affair with a subordinate at the workplace, as the husband did in Emery – led to a party being fired to resign. Although the case law was thin for such scenarios, there has long been an understanding among Probate and Family Court judges that individuals who are fired for cause good examples of when courts would attribute income. If a party was fired (or forced to resign) due to workplace misconduct, the thinking went, than that party should not be able to use his or her misconduct as an excuse to lower alimony or child support.
Emery on Appeal: Appeals Court Rejects Lower Court’s Child Support and Alimony Orders Where Husband Made Reasonable Efforts in Job Search Following Resignation
In Emery, the Appeals Court slammed the door on the widely held view that a party who loses his or her job due to workplace misconduct should be allowed to reduce his or her child support or alimony payments as a result of reduced income. Specifically, the Appeals Court held that a party’s “blameworthy conduct” – e.g. the Emery husband’s affair with a workplace subordinate – is an “an impermissible factor” for a court to base an income attribution order upon:
It is wort noting that while the judge failed to give appropriate attention to the required “reasonable efforts” inquiry, he appeared to consider an impermissible factor – the husband’s conduct — when deciding to attribute income to him. The judge specifically found that “[t]he [h]usband’s resignation from his position as Head of School was voluntary and was the result of his affair with a subordinate. The [h]usband’s willful and deceptive behavior resulted in the resignation …. As a result of the [h]usband’s resignation, the [w]ife lost her housing, access to unlimited meals at no charge, use of a vehicle, subsidized vacations and numerous other benefits.” “[W]e caution against the view that … alimony … may be justified purely on the basis of the blameworthy conduct of one of the spouses.” Putnam v. Putnam, 5 Mass. App. Ct. 10, 15 (1977).
Although the Appeals Court had long cautioned against “punishing” parties for their bad acts when setting initial child support or alimony orders, the force of the Appeals Court’s argument in Emery was somewhat surprising, where the husband was seeking to reduce his existing child support and alimony obligations through a complaint for modification. After all, the Putnam decision, which the Appeals Court cites above, always stood for the proposition that divorce courts should not punish a spouses for “blameworthy conduct” during the marriage by forcing the party to pay extra alimony. When a party files a modification seeking a reduction in support, however, that party is seeking to reduce an existing, court-ordered support obligation.
(It is often said that “hard cases make bad law”, and one thing that stands about the Emery decision is the impression that the Appeals Court clearly disapproved of the methodology used by the probate and family court judge in the original divorce trial. Given that the husband had already been unemployed for a year at the time of the divorce trial, and had already made great efforts to find new work prior to the divorce trial, it seems clear that the Appeals Court felt that the original child support and alimony orders entered following the divorce were probably unmerited. However, it is important to point out that the husband chose to represent himself at the original divorce trial, then failed to appeal the judgment of divorce after it entered. Without going too deep into the legal weeds, it is fair to say that the impact of the Emery decision in Massachusetts court rooms is likely to be more sweeping and dramatic because the case arose out of a complaint for modification. The bottom line is that the Emery holding will be used to justify the reduction or elimination of existing child support and alimony orders, causing a bigger impact than a decision affecting only new cases.)
A Widely-Held Belief Among Judges: A Party Who is Fired for Employee Misconduct Should Not Receive a Reduction in Child Support or Alimony
It is fair to say that many Massachusetts Probate and Family Court judges have included a party’s blameworthy conduct in the workplace when evaluating that party’s request to reduce child support or alimony under an “unclean hands” theory. The crux of the “unclean hands” theory is that a party should not be able to seek an outcome from the court that results from the party’s own improper or unethical actions. Thus, in the child support and alimony context, the thinking went that a party who loses his job due to employee misconduct should be treated as having “voluntarily” left that job, and the party’s request to reduce his or her child support or alimony payments should be rejected. Said another way: many judges think that the person who ought to financially suffer is the party who engaged in misconduct, not the innocent recipient of child support or alimony who did nothing wrong.
Against this backdrop, it is likely that many probate and family court judges would argue that a party who is fired (or resigns in disgrace) due to an affair with a workplace subordinate should not be allowed to benefit from his misconduct through lower child support or alimony.
The Emery decision rejects this line of thinking somewhat forcefully.
The Bigger Picture After Emery: The Current Employment Prospects of a Party are More Important than How Their Last Job Ended
The bigger picture in Emery was the Appeals Court’s realignment of the critical factors analyzed in income attribution cases. While previous decisions have emphasized the importance of holding an employee responsible for his or her “voluntary” job loss, the Emery Court held that the “voluntariness” of the job loss is far less important than (a.) a party’s actual, real-world employability in the current job market based on his or her skills and experience, and (b.) the party’s documented efforts to search for an appropriate job by submitting applications and attending interviews. In Emery, the Court focused tightly on the extensiveness of the husband’s job search in the year after he left the Northfield Mount Herman job:
[T]he husband (1) applied for dozens of positions in the private education sector, the majority of which were head of school or similar positions; (2) traveled frequently, often several times per month (including to Boston, New York, Connecticut, California, and China), to attend numerous interviews, meetings, and job fairs; (3) worked with several recruiters and job search agencies; (4) reached out continuously to his contacts in the education field regarding potential job openings; and (5) worked on developing skills in educational technology to further enhance his marketability. These efforts to secure a permanent position resulted in a single job offer, the head of school position [in Cincinnati], which the husband accepted.
The Appeals Court was critical of the probate and family court judge’s view, which was that the husband should have continued looking for a better-paying job after securing the Cincinnati position:
It is neither reasonable nor fair to expect the husband, after he has engaged in an extensive job search in his field of expertise and has secured employment commensurate with his training and experience, to continue his job search efforts indefinitely to avoid the risk of income attribution. … Accordingly, not only did the judge fail to make a specific finding that the husband could earn more with reasonable effort, it is apparent that such a finding cannot be made on this record.
The Emery analysis does not totally eliminate the issue of voluntary job loss from the equation in income attribution cases. For example, the Court conceded the following:
When determining the earning capacity of a party who has recently undergone a career change, we have said that “[a]ttribution of income may be appropriate when a judge determines a career change is voluntary.” … . In such voluntary career change cases, attribution based on a party’s prior earning capacity has been permitted when that party has voluntarily left his or her job and has thereafter failed to make reasonable efforts to secure comparable employment. This may occur when a party has taken an early retirement, or has chosen to pursue work in a totally unrelated field at a substantially reduced salary, despite the availability of higher-paying jobs commensurate with that party’s education, training, and experience. [Citations omitted.]
However, the decision is explicit: the question of “voluntariness” is secondary to the larger question of whether a party can “earn more with reasonable effort”:
Regardless of the circumstances surrounding the husband’s resignation from NMH, the judge was still required to consider whether, at the time of the modification trial, the husband could earn more with reasonable effort. … The reasonable efforts inquiry is critical, and is generally the determining factor in whether to affirm the attribution of income to a party based on his prior earning capacity. … Indeed, as we have previously observed, “neither this court nor the Supreme Judicial Court has affirmed an attribution of income made without a finding concerning the party’s reasonable efforts to secure employment.” [Emphasis added. Citations omitted.]
The decision goes on to make clear that a party’s “reasonable efforts” must include a clear-eyed analysis of the party’s actual job prospects in the local work force. For example, the mere fact that the husband in Emery was able to earn substantial income at Northfield Mount Herman did not mean the husband could easily find a comparable job after his resignation. There are only so many highly prestigious private schools in the United States, with only a few openings at the top within that small handful. Had the husband worked in the financial industry, where his skills would be broadly applicable to many positions in a deep employment pool, the situation may have been different. Instead, the husband was placed in the precarious position of seeking a position in an extremely limited and image-conscious industry, where word of the husband’s indiscretions no doubt got around, and likely disqualified the husband from the most elite positions.
A Strange Byproduct: A Party’s Workplace Misconduct Might Help His or Her Case Under Emery
It is clear that the Emery Court’s intent was to impose a more objective standard for income attribution cases based on measurable data – such as testimony from employment experts, job applications, and job availability – while reducing the tendency of judges to rely on subjective criteria such as morality and “blameworthy conduct” in such cases. One possible byproduct of the decision, however, is that the opinion slams the door on the “unclean hands” theory (i.e. party’s should not benefit from their own misconduct through reduced alimony or child support) that a party’s workplace misconduct actually becomes an asset in his or her case.
Following Emery, parties will likely argue that their inability to regain full employment through reasonable efforts is the direct result of their misconduct. Thus, the husband in Emery could cite the harm to his reputation resulting from affair with a subordinate as the very reason he cannot find a comparable job. Indeed, any employee who is fired from his or her most recent job is likely to have a harder time finding a new job than a similar candidate who was not recently fired.
This all begs the question: would a party get themselves fired intentionally just to reduce child support or alimony? The answer is unquestionably: yes, some party’s will do exactly this. Maybe a party is planning on quitting an industry where reputation is important to start his own business at much lower pay. Perhaps the only thing stopping this party from taking this step is his or her child support alimony obligation. For such a party, the Emery decision offers a new approach: why not get fired in such a spectacular way that it makes it impossible to find a similar job in the future?
Obviously, there are many (many) risks that a party would face if he or she engages in intentional workplace misconduct in order to reduce his or her child support or alimony obligation under Emery. For example, even if such a party eventually wins their argument at trial, he or she could face several years of mounting arrearages before finally having a trial, where probate and family court judges have broad discretion over the entry of temporary orders during the pendency of a modification case. Moreover, even if Emery supports their argument, a party has no guarantee that a probate and family court judge will follow the applicable case law after trial; some judges might be so turned off by a party’s behavior that they force the party to appeal a decision, resulting in another year of litigation (and tens of thousands in legal fees).
In the end, the Emery decision will limit Massachusetts probate and family court judges to analyzing a party’s job loss in economic terms. There is no question that workplace misconduct harms an individual’s employment prospects, and the Emery decision suggests that the economic reality of the party’s actions – not a moral or ethical analysis of his or her conduct – should prevail. The decision clarifies the income attribution analysis in several important ways, but it also undermines a key disincentive that has long prevented child support and alimony payors from exploiting their own bad acts to reduce their support obligations.
Another Detail: Under Emery, a Party is Not Obligated to Keep Searching for a Higher Paying Work After Finding an Appropriate Job
A small but important detail in Emery also focused on the lower court’s attribution of income due to the husband’s alleged failure to keep searching for a better-paying job after he landed the Cincinnati position. On this issue, the Appeals Court held:
It is neither reasonable nor fair to expect the husband, after he has engaged in an extensive job search in his field of expertise and has secured employment commensurate with his training and experience, to continue his job search efforts indefinitely to avoid the risk of income attribution.
Although this is only a small portion of the opinion’s text, the caption quoted above suggests that a party who accepts a lower-paying job after a year of diligent searching is not obligated to keep searching for an even better paying job. Of course, a party should not assume that accepting the first job available he or she is offered will satisfy their job search obligations either. In Emery , the husband traveled not just the country seeking a new job, but the world – including holding a job interview in China – before finally accepting the Cincinnati position. The Emery husband would probably be the first to admit a degree of fault for his initial job loss, but one area where he can’t be faulted is the diligence of his job search.
The point remains: if a party accepts a lower paying job after completing a diligent job search, Emery suggests that the party is not obligated to keep searching for a better-paying position indefinitely.
Practical Considerations: Expert Testimony More Important Than Ever in Income Attribution Cases
It is no secret that Massachusetts Probate and Family Courts face a huge volume of unrepresented parties, with some now estimating that more than 70% of domestic relations cases feature pro se parties without an attorney. Common sense suggests that parties who are unable to afford an attorney lack both the legal knowledge and financial means to retain and pay for an expert witness to provide testimony in an income attribution case. Nevertheless, the decision in the Emery continues a trend in the recent cases making the testimony of an employment expert increasingly necessary in income attribution cases.
In Emery, the Appeals Court once again presses probate and family court judges to avoid simplistic, subjective criteria in income attribution cases, such as the widely held belief that if a party is fired for workplace misconduct, then that party who engaged in misconduct – and not the recipient of alimony or child support – should be responsible for the negative consequences. The notion that a party who is fired for workplace misconduct should be barred from reducing his or her alimony obligation under an “unclean hands” theory is logical. It represents a kind of rough justice based on the idea that the children and former spouse shouldn’t suffer for the bad acts of a misbehaving party. It is also an easy, simple formulation that allows judges to impose income attribution without the need for expert testimony.
Through Emery and other recent attribution cases, the Appeals Court is pressing for a more scientific, objective approach to income attribution. The key question is no longer how the party lost his or her prior job, but whether the party’s work history and employability, combined with conditions within the local labor market, make it reasonable to expect the party to regain employment at a level consistent with the prior position. While judges may be able to draw some basic conclusions about a party’s employability from his or her resume and general knowledge of the job market, an in-depth analysis of both the party’s employability and the availability of potential jobs requires the testimony of an employment expert.
One silver lining for parties and counsel facing income attribution cases is that employment experts tend to be somewhat less expensive than other types of experts. For instance, it not unusual for a business appraiser to quote a price of more than $15,000 to calculate the value of even a small business. Meanwhile, the going rate for a court-appointed Guardian ad Litem for a Massachusetts child custody case frequently exceeds $7,500 these days. Many employment experts are willing to prepare a written report that includes an analysis of a party’s employability and the availability of local jobs for less than $3,000. The expert’s cost will increase if his or her testimony is required at trial, but many a case has settled over the years in the wake of well-written expert report.
For indigent clients who cannot afford an attorney, a $3,000 price tag may put an employment expert out of financial reach, but for parties whose entire case comes down an income attribution argument, the expert’s retainer can easily pay for itself in the form of better outcomes and reduced attorney’s fees.
Try the Lynch & Owens Massachusetts Alimony Calculator
Think you have an alimony case in Massachusetts? Estimate the amount and duration of alimony in your case with the Lynch & Owens Massachusetts Alimony Calculator:
About the Author: Nicole K. Levy is a Massachusetts divorce lawyer and Massachusetts family law attorney for Lynch & Owens, located in Hingham, Massachusetts and East Sandwich, Massachusetts. She is also a mediator for South Shore Divorce Mediation.