How often do family law attorneys hear the following questions: "What if I get a job that makes less money? Then can I get a court order to pay less child support?" These folks often plan on earning less, getting their child support reduced and then getting a better job. However, the Texas Family Code is a step ahead and allows family courts to use a parent's earning potential when calculating child support if that parent is intentionally underemployed or unemployed.
Before exploring this issue, let's review how child support is calculated in Texas. The person responsible for paying child support is referred to as the "Obligor". The first step in calculating child support is figuring out the Obligor's "net monthly resources". Net resources is all income from all sources minus the following: return of principal or capital; accounts receivable; benefits paid under the Temporary Assistance for Needy Families program or other federal public assistance programs; payments for care of a foster child; social security taxes; federal income tax assuming one person claiming a personal exemption and standard deduction; union dues; cost of medical insurance or medical support for the child(ren) before the court; and non-discretionary retirement plan contributions if the Obligor doesn't pay social security taxes. Generally, the Obligor's net resources for the past year are calculated and then averaged to a monthly amount. If the Obligor's net monthly resources are less than $8,550, then the Obligor pays a percentage of his net monthly resources as child support. The amount of the percentage depends on the number of children before the court. For example, if the Obligor has to pay support for one child, then the Obligor's child support amount will be 20% of the Obligor's net monthly resources. It's 25% for two children and 30% for three children.
As you can see from how child support is calculated, an Obligor's "net monthly resources" is the most important number for calculating child support. In the case of Obligors who are artificially trying to lower their net monthly resources, the Texas Family Code states, "If the actual income of the obligor is significantly less than what the obligor could earn because of intentional unemployment or underemployment, the court may apply the support guidelines to the earning potential of the obligor." Basically, this law means if an Obligor is purposefully making less money or not working, then the court can pretend as though that Obligor has a job and use that imaginary job's imaginary salary to calculate child support. There are three key factors under this law that we need to think about.
First, when is an Obligor making significantly less than what they could earn? Unfortunately, there is no clear answer or formula. This has to be judged by the court on a case-by-case basis. Some of the factors the court will consider include the Obligor's job history, education, current employability and control over payroll and the needs of the children.
Second, how do you know the underemployment or unemployment is intentional? Again, this has to be judged on a case-by-case basis. The factors the court considers in determining whether an Obligor is earning significantly less also come into play in figuring out if the underemployment or unemployment is intentional. Additional factors the court may consider include how the Obligor's past jobs ended and what efforts the Obligor is making to find a new job. For example, if an Obligor quits a high paying job for no good reason and doesn't look for a new job, then a court is likely to find that that Obligor is intentionally unemployed.
Finally, if the court determines that an Obligor is intentionally making significantly less than what they could, how does a court calculate the income that Obligor should be making? In other words, how does a court figure out an Obligor's earning potential? Again, this must be determined on a case-by-case basis. Some methods courts have used include looking at the Obligor's past earnings. Another method is through experts. An expert can be very helpful by testifying how much an obligor with a specific education can make in a specific industry in a specific location.
The key takeaway is that courts have broad discretion in deciding whether an Obligor is intentionally underemployed or unemployed and on how much that Obligor should be making. In these situations, judges, based on the evidence before them, should and usually do have the children's best interest in mind. For those Obligors considering intentional underemployment or unemployment, be warned that most family court judges who have been on the bench for a few years can sniff out intentional underemployment or unemployment when presented with the proper evidence. For those dealing with intentionally unemployed or underemployed Obligors, do not forget that the law has provided you a means to fight back.