Earning Capacity
In child or spousal support proceedings, an “earning capacity” may be imposed on a party for the purpose of calculating support if that party willfully fails to maintain or obtain appropriate employment. Assessing someone an earning capacity means that that party’s support obligation will be calculated on a determination of what they “could” be earning, as opposed to what they are actually earning. Appropriate employment varies from individual to individual. Relevant factors in determining a party’s earning capacity include, but are not limited to, a party’s level of education, prior work experience, any medical concerns or disabilities, young children in the home, childcare costs, and their ability to obtain employment based on the local job market.
A frequent issue that arises in the context of earning capacity is a job or career change. If a party is earning more money at a new job, then there is generally little doubt that their new earnings should be included in the support calculation. When a party starts working at a new job and is earning less than they were earning previously, however, it may be appropriate to impose an earning capacity on them for purposes of calculating support. A party who chooses to quit a higher paying job without good cause will often have an earning capacity imposed upon them (likely in the amount that they were previously earning), whereas a party who is no longer able to work at that higher paying job due to medical concerns likely will not be assessed an earning capacity.
Generally speaking, if the Court imposes a higher earning capacity on a party, that will result in that party either paying more support or receiving less support (depending on whether the party at issue is the payor or the payee).
Having an earning capacity imposed in a support order does not mean that a party is required to seek, or find, a job that pays more. Instead, the sole purpose of the earning capacity in a support proceeding is its use in calculating the monthly support obligation.
The attorneys at Tanner Law Offices are experienced in complex support matters. If you would like to discuss your questions regarding child or spousal support in greater depth, please contact Tanner Law at 717-836-0471 for a consultation.