Facts: When Husband and Wife divorced in 2011, Mother was designated the primary residential parent of their child and Father was ordered to pay $814 each month for child support.
Father’s child-support obligation was later reduced to $288 a month.
In 2015, Father petitioned to decrease his child-support obligation because of his reduced income. Mother counter-petitioned to increase Father’s obligation.
Father is a self-employed subcontractor. The trial court found that Father’s claimed expenses had risen dramatically in the preceding years. Father was also found to have reduced the amount of time he worked and diverted business to his brother, who works in the same field as Father. Specifically, the trial court found that “a significant portion of [Father]’s available income is going to” his brother. As a result, Father’s income decreased from approximately $56,000 to roughly $40,000 per year.
Although the trial court found that Father was voluntarily underemployed, it declined to impute income to him or modify his child-support obligation.
Both parties appealed.
On Appeal: The Court of Appeals reversed the trial court.
The determination that a parent is underemployed is a question of fact that requires careful consideration of all the circumstances. The Tennessee Child Support Guidelines require trial courts to consider these factors in determining whether a parent is willfully or voluntarily underemployed:
- the parent’s past and present employment;
- the parent’s education, training, and ability to work;
- whether the parent is a stay-at-home parent;
- the parent’s extravagant lifestyle;
- the parent’s role as a caretaker for a disabled child or parent;
- whether the parent is pursuing additional training or education that will increase the parent’s level of child support; and
- any other relevant factors.
The Court held the trial court erred in its determination that Father was voluntarily underemployed:
Based on the evidence that Father’s income decreased from $56,000 to $40,000, the trial court held that Father was intentionally underemployed. Upon our review of the entire record, we do not find support for this holding. While there is substantial and credible evidence that Father was inflating his expenses and assigning a substantial portion of his income-producing business to his brother, this does not constitute intentional underemployment within the meaning of the [Guidelines]. Accordingly, we reverse the trial court’s finding that Father was underemployed.
The Court also noted that “a lack of credible proof of income” functions as “another ground for imputation of income,” and the case was remanded back to the trial court to determine Father’s income. Once Father’s income is determined, the trial court must modify his child-support obligation if there is a significant variance.
K.O.’s Comment: To recap, the trial court found:
- Father is self-employed.
- Father is inflating his expenses, thereby intentionally decreasing his claimed income.
- Father is assigning a substantial portion of his income-producing business to his brother so “a significant portion of [Father]’s available income is going to” his brother.
- Father’s annual income decreased from $56,000 to $40,000.
The Court of Appeals said the trial court committed reversible error by finding Father voluntarily underemployed on these facts.
Am I the only one puzzled by this outcome?
Try to reconcile the Court’s ruling with these cases:
- In In re Samuel P., the Western Section recognized that a self-employed parent can manipulate the parent’s reported income by either failing to aggressively solicit business or by inflating the parent’s expenses, thereby minimizing the parent’s income. That is what the trial court found here.
- In Benedict v. Benedict, the Eastern Section held voluntary underemployment must be supported by evidence showing that the parent can earn more and is not obtaining this better-paying work to reduce the parent’s income. Again, that is what the trial court found here.
- In In re M.P.J., the Eastern Section concluded that the father was voluntarily underemployed where he testified he had declined available employment. Here, Father was found to have declined business by sending it to his brother.
Unfortunately, the Court provides nothing more than the conclusory statement that the facts as found by the trial court do not constitute voluntary underemployment. The Court does not explain its reasoning and fails to address the large body of caselaw to the contrary.
Intentionally manipulating one’s income so it is less than one’s earning capacity, which is what the trial court found here, is the definition of voluntary underemployment. How can it be that the trial court erred?