Imputing income to a party who is voluntarily unemployed, underemployed or employed on a less than full-time basis can be a complex task.
Clients often wonder how child support can be calculated if one party is working less than full-time or earning less than they are capable of. Minnesota State Law allows the court to calculate a party’s potential income.1
The court must first determine whether a party is voluntarily unemployed, underemployed or employed on a less than full-time basis. A party is not considered to fall into any of these categories if the party can show one of the following:
- The situation is temporary and will ultimately lead to an increase in income. This might be a situation where a party is attending school and thus working only part-time.
- The situation is a result of a party making a bona fide career change that outweighs the adverse effect of that party’s diminished income on the child. This might occur in a situation where a parent takes a reduction in pay to go from a job working out-of-state or involving a lot of travel to a job in-state which would ultimately allow them more time with the child.
- The situation is due to a party’s physical or mental incapacitation or incarceration (except if the incarceration is due to the party’s failure to pay child support).
If the court determines that a party is voluntarily unemployed, underemployed or employed on a less than full-time basis, or, if there is no direct evidence of any income for a party, child support will be calculated based on a determination of that parent’s potential income.
Calculating potential income
The court has three options for calculating a party’s potential income:
Probable Earnings Level
Potential income can be calculated based on the party’s probable earnings level. This amount is determined by examining a party’s employment potential, recent work history, and the party’s qualifications in light of the job market and current earning levels in the community.
This method can be used for someone who has a strong employment history with records that show their recent earnings and earning capacity. Research can be done to determine the median earnings of someone in a particular industry or field and data exists that can even show earnings as they differ from region to region around the state. Vocational evaluations are another tool that can be used to determine a party’s potential income when that party has education, work experience, and marketable skills. A vocational evaluation can also be used to determine the potential income of someone who has been out of the job market for a significant period of time but was previously employed or has education or training in a specific field.
If a party receives unemployment income or workers’ compensation, that party’s income can be determined by using the actual amount of unemployment compensation or workers’ compensation actually received.
Basically, if a party is receiving a benefit from either unemployment or workers’ compensation, the court will use the actual amount of the benefit they are receiving as the calculation of their monthly income. If the benefits terminate and that person is still not employed full-time, the court may then have to choose one of the other two methods for determining potential income at that time.
Full-Time Work at 150% of Minimum Wage
The amount of income a party could earn working full-time at 150% of the current federal or state minimum wage, whichever is higher.
Currently, the federal minimum wage is $7.25 per hour. The current state minimum wage is $8.00 per hour for large employers (enterprise with gross sales volume or business done of $500,000 or more). Thus, the court would calculate potential income based on the state minimum wage as it is higher than the federal. 150% of the current state minimum wage is $12.00 per hour. Multiplied out by 40 hours in a week and it totals gross income of $480 per week. The court will typically multiply the weekly figure by 4.33 to arrive at a monthly figure. In this case, that would be approximately $2,078 per month or approximately $24,936 annually.
Once the court has determined the potential income of a party, they can move on with the process of calculating child support.
If you face a spouse who is not paying what you believe they should or if you are paying child support and believe your situation merits a lower calculation, please, contact us today to schedule your free consultation. I have extensive experience in working on both sides of cases involving child support and can make sure you receive just treatment. You can call us at 651-647-0087 or reach out via our online contact form.