Monterey California Family Law -- Imputed Income, When the Other Party is NOT Making What They Can

Monterey California Divorce Lawyer
Monterey California Child Custody Attorney
Monterey California Family Law Attorney
Monterey California Child Support Attorney

IMPUTING INCOME FOR SUPPORT

Often times as a family law attorney I am asked what happens if the other parent is working, but not working full time or to their potential?  In other words, what happens when someone is trying to artificially lower their income in order to pay lower child support?  The short answer is that the Court can impute income to that party, which means that although a party is not actually earning an income, the Court will use income figures as if the party were making the income the party has the ability to make.

How does this work?

Family Code §4053 sets forth principles to be followed by the Court in implementation of statewide uniform guidelines for child support.  Of importance in the instant matter are the following sections:

(a)    A parent’s first and principal obligation is to support his or her minor children according to the parent’s circumstances and station in life.

(b)   Both parents are mutually responsible for the support of their children.

(c)    The guideline takes into account each parent’s actual income and level of responsibility for the children.

(d)   Each parent should pay for the support of the children according to his or her ability. 

Family Code §4058 defines annual gross income of the parents.  Of importance in the instant matter is the following section:

            (b) The Court may, in its discretion, consider the earning capacity of a parent in lieu of                  the parent’s income, consistent with the best interests of the children. 

In order to impute income to a non-working or under-working parent for purposes of calculating support, a three-prong test exists before a capacity to earn standard may be applied.  Earning capacity is composed of (1) the ability to work, including such factors as age, occupation, skills, education, health, background, work experience and qualifications; (2) the willingness to work exemplified through good efforts, due diligence and meaningful attempts to secure employment; and (3) an opportunity to work which means an employer who is willing to hire. [See: In Re Marriage of Regnery (1989); 214 Cal. App. 3d 1367; and In Re Marriage of Ilas (1993); 12 Cal. App. 4^th 1630].  However, MANY Courts discarded the second prong, and made an assumption or obligation of a party’s willingness to work.  Thus, it is in reality a two-prong test. 

It must be noted that in applying the capacity to earn standard, the Courts are permitted to do so when dealing with child support when it is consistent with the child or children’s best interests.  [In Re Marriage of Ilas (1993); 12 Cal. App 4th 1639, 1636]  This discretion is granted by looking at Family Code §4058(b) which allows the Court to substitute earning capacity for actual income in applying the guideline formula.  Although, Family Code §4053 states that the Courts shall adhere to the principle that guidelines take into account each parent’s “actual” income, that section does not prescribe hard and fast rules it only denominates a set of principles.  Further, Family Code §4053(d) states that each parent should pay for the support of the children “according to his or her ability.”  Read together, these two statutes ensure that, while actual income must be considered, so must the parent’s ability to earn.  Family Code §4058, actuates both of these principles by allowing the Court to substitute earning capacity for actual earnings consistent with the best interest of the child.  [See In Re Marriage of LaBass (1997); 56 Cal. App 4th 1331, 1337]

The Courts have also reasoned that a parent does NOT have the right to divest himself or herself of his or her earning ability at the expense of minor children.  When a parent decides not to seek employment to the best of his or her ability, the Court must retain discretion to impute income otherwise one parent by a unilateral decision could eliminate his or her own responsibility to contribute to the support of the child, causing the entire burden of supporting the child to fall upon the employed parent.  [Citing: In Re Marriage of Padilla (1995), 38 Cal. App. 4th 1212]

Additionally, the Court in LaBass noted that while most cases deal with imputation of income to the supporting spouse, there is NO support in case law or code which support a claim that the case law dealing with imputation of income to a supporting spouse does not apply to the “care giver” whose refusal to realize her earning potential is motivated by “her perception of ‘the best interests of the children.’”  [Emphasis NOT added] [LaBass, at 1340] Rather, Family Code §4053(b) states unequivocally that both parents are equally responsible for the support of their children.  Accordingly, Family Code §4058(b) makes no distinction between custodial and non-custodial parents. [Id.]