When May Alimony Be Reduced Due To A Loss Of Long-Term Employment?
In 2014 New Jersey’s alimony laws were amended following a joint effort between divorce lawyers and the legislature to “modernize” our states’ alimony statute. One of many changes involves how New Jersey courts would interpret cases wherein the payor of alimony attempts to eliminate (or lower) their alimony payments due to losing a prior job wherein they were employed for a lengthy period of time and has now gained new employment. However, the new job provides a “significant” reduction in income that, in turn, compromises their ability to pay alimony at the same level as previously agreed upon in the Property Settlement Agreement prepared by one of the attorneys in the case or ordered by a judge of the Superior Court of New Jersey following a trial.
In a recent case the payor of alimony was successful in obtaining a decrease in their alimony payments. First, the amount of alimony payments was lessened in amount when the payor lost their job (which must be W-2 job as per the amended alimony statute) and has successfully proven to the court that they made a realistic effort to obtain a similar job with comparable employment.
Next, the court shall consider if the payor was both fair and realistic in taking the new job, looking at the “totality of the circumstances,” even though they now earn less money. In other words, was this the best that job that they could honestly obtain after many years working for one employer as opposed to purposefully and invidiously accepting a lower paying job with the hope of eliminating their alimony payments. Finally, if the reasons for the loss of income are credible, then how much of a reduction (if applicable) would be just given the particular facts of this case. Let’s take a closer look.
In Mills v. Mills, the Honorable Judge Jones of the Superior Court of New Jersey, Family Part of Ocean County, reviewed the legal issues surrounding a case where the spouse paying alimony lost his job, and the application of the 2014 amendments to New Jersey Statute 2A:34-23(k), the alimony statute. Supporting spouse, Ronald Mills filed a motion to reduce his alimony obligation to his ex-wife, Lisa Mills, because he lost his previous long term employment, and got a new job with a lower salary. Lisa opposed the sought after reduction, and argued that it did not apply because they got married before September 10, 2014, the date the statutory amendments were enacted.
Judge Jones granted Ronald’s motion to reduce his alimony obligation. He held that under the 2014 amendments to the alimony statute, a family part court has the authority to reduce an alimony obligation when the supporting spouse loses his or her previous W-2 employment, and make reasonable attempts to find alternative employment. Furthermore, in a situation where the supporting spouse loses his job gets a new job with a much lower salary, the Family Part should ask two questions. First, if the supporting spouse’s decision to accept the particular job was reasonable under the totality of the circumstances. If it was, then the court must ask whether any adjustment in the support obligation due to that particular job is reasonable and fair to both parties, under the specific facts on the case. In Mills, Judge Jones found that the spirit and language of the 2014 statutory amendments to the alimony law were relevant and appropriate to apply because while Lisa and Ronald got divorced before September 10, 2014, their matrimonial settlement agreement did not contain any provisions that limited or defined the standard of review in case of a future modification of support due to loss of employment and a decrease in salary.
Lisa and Ronald got divorced in 2013. They had two children together after thirteen years of marriage. When they divorced, both parties agreed that Ronald would pay Lisa $ 330 a week in limited duration alimony for eight years, and $ 200 a week in child support. There was no language in the settlement agreement that stated what would happen to the support obligation if a substantial change of circumstance took place, such as Ronald’s termination and subsequent reduction in income. The support provisions of the settlement agreement were based on a stipulated financial baseline of Ronald earning $ 108,000 a year in gross income.
After working as a flooring salesman at the same company, Ronald involuntarily lost his job in January 2015, when the company restricted its business plan. He started looking for a new job and found one in April 2015, for a similar job in another flooring company. This job, however, had a significantly lower salary of $ 70,000. Faced with the decision to either take the job with a lower salary, or refuse the job and continue the job search for another job with a salary closer to his previous income. Ronald chose to accept the job.
After he started his new job, Ronald initially payed Lisa the same amount of alimony at $ 330 a week, because he had the severance pay from his previous job. However, nearing the year’s end, he had used up almost all of the severance pay, and on November 24, 2015 he filed a motion to prospectively modify and reduce his support obligation. He argued that he suffered a loss of employment and a significant decrease of about 25% of his previous salary that served as the baseline for his support obligation. In response, Lisa argued that the Family Part should not reduce his support obligation, and questioned the circumstances around Ronald’s loss of employment. She further argued that to decrease the amount of support she received would result in economic difficulties, and trouble in maintaining her current budget. She maintained that Ronald still had an income potential of $ 108 at the very least, and that he failed to demonstrate that he could not still earn at least this level of income. She essentially argued that he was underemployed, and as such the court should impute on Ronald his previous level of income of $ 108,000, and not to reduce his support obligation.
During testimony, Ronald testified that he originally starting working at his previous company twelve years ago and started out earning $ 50,000 a year. He gradually worked his way up the financial ladder as a valued employee with his salary increasing along the way. Ronald explained that he secured his incremental increases in salary by committing time and effort, a process that could not be automatically duplicated at a new company.
Judge Jones explained before the 2014 amendments to New Jersey’s alimony law, the disparity of the developed case law led to ambiguity and uncertainty of the standard of review in Family Part courts that applied to the question of whether or not a supporting spouse was entitled to a reduction in his or her alimony obligation. Because of this uncertainty, the New Jersey Legislature amended the alimony statute in 2014, and added a new provision, N.J.S.A 2A:34-23(k). This provision specifically states what is to happen when a supporting spouse suffers a termination of employment or substantial reduction in income. In such a situation, the statutory provision requires a the Family Part to consider a list of statutory factors including: (1) reasons for the loss income; (2) efforts to secure a new job or purse an alternative career; (3) if the supporting spouse is making a good faith effort to secure a job at any level or in any field; (4) the income of the spouse receiving income, and his or her reasonable efforts to get a job in light of those circumstances and existing opportunities; (5) the effect of each parties’ health on their respective abilities to acquire work; (6) any severance compensation paid in relation to a loss of employment; (7) changes in financial circumstances of the parties; (8) if a temporary remedy should be crafted to adjust the support award, pending a continuing employment search by the unemployed spouse; and any other factor the court findings relevant to equitably and fairly decide the motion.
In Mills, Judge Jones found that when a supporting spouse requests a modification of his or her alimony obligation due to a recent loss of employment, the court has authority to apply the spirit and terms of the 2014 amendments to the alimony statute, even if the couple got divorced before 2014, as long as the parties did not have a written agreement to apply a different standard, and the issue has not been litigated and adjudicated already by a Family Part court. That statutory amendments do not explicitly state any where that it will only apply to marriages entered into after September 10, 2014. Furthermore, Ronald’s loss of employment and change of circumstances did not happen until after September 10, 2014, the effective date of the statute. Even had the statutory amendments never been amended, Judge Jones stated Ronald had still proved a sufficient change in circumstance to warrant a modification of support under the Lepis standard.
If you have an issue regarding alimony, your inquiry is invited.