Determining Alimony: Imputing Income to an Underemployed Spouse
The Utah Court of Appeals recently reversed and remanded a trial court’s divorce decree which imputed income to the husband for purposes of determining alimony. In Rayner v. Rayner, 2013 UT App 269, the husband had been unemployed for approximately two years at the time his wife filed for divorce. Although he had been unemployed, the trial judge imputed an income of $40,000/year in order to calculate an alimony award for the wife. The parties had been married for 30 years.
The trial court found that husband had improperly turned down a $40,000 job in Nephi (he lived in Bountiful). Husband had been making $88,000 a year before he lost his job. Husband argued that he was fired for cause; his wife argued that he quit his job. Husband also argued that he earned an income from an MLM business he had been working on and that it was the only viable employment he could do based on his health restrictions.
On appeal the court addressed the proper applicable law concerning alimony. “When determining the appropriate amount of alimony, a trial court must make findings as to ‘the ability of the payor spouse to provide support.’” Fish v. Fish, 2010 UT App 292, ¶ 14, 242 P.3d 787 (quoting Utah Code Ann. § 30-3-5(8)(a)(iii). “In doing so, ‘[a] court may impute income to an underemployed spouse.’” Id. (quoting Connell v. Connell, 2010 UT App 139, ¶ 16, 233 P.3d 836). “[T]he imputation analysis . . . involves determining whether the [spouse] is voluntarily unemployed or underemployed and, if so, how much income ought to be imputed.” Busche v. Busche, 2012 UT App 16, ¶ 13, 272 P.3d 748. A spouse is “‘voluntarily unemployed or underemployed’ when [he or she] intentionally chooses of his or her own free will to become unemployed or underemployed.” Id. ¶ 16.
If the trial court determines that a spouse has been involuntarily terminated, the trial court must then consider what the [spouse] has done in the aftermath of termination to determine whether he or she has become voluntarily underemployed by virtue of his or her failure to then make reasonable efforts to obtain employment at a pay rate comparable to that of the lost employment.” Id. ¶ 21. In addition to considering the spouse’s efforts, the trial court must consider the spouse’s “employment capacity and earnings potential.” Hall v. Hall, 858 P.2d 1018, 1026 (Utah Ct. App. 1993). Employment capacity involves consideration of the spouse’s abilities and limitations, qualifications, experience, and skills. Busche, 2012 UT App 16, ¶¶ 21–22; Hall, 858 P.2d at 1026. An earning potential determination involves comparison of the spouse’s current earnings with his or her historical income, “the prevailing wages for a person with his or her qualifications” and consideration of whether there are jobs reasonably available “in the relevant market for a person with the party’s qualifications and experience.” Busche, 2012 UT App 16, ¶¶ 21–23; Hall, 858 P.2d at 1026. In sum, “a finding of voluntary underemployment must be based on evidence that the party could be earning more with reasonable effort.” Busche, 2012 UT App 16, ¶ 22.
If income is imputed to a spouse, the income shall be based upon employment potential and probable earnings as derived from employment opportunities, work history, occupation qualifications, and prevailing earnings for persons of similar backgrounds in the community, or the median earning for persons in the same occupation in the same geographical area as found in the statistics maintained by the Bureau of Labor Statistics.
Based on these legal principles the appellate court found that the trial court did not make sufficient findings to impute income to the husband and thus reversed the decision and remanded it o the trial court to make those findings.