Support payors and recipients are equally likely to be unemployed in the current environment, and both parties may find themselves unemployed in an economy where unemployment has reached 20% with no real sign of slowing. It’s time to start thinking about child support rights and responsibilities in a pandemic-broken economy.
Dr. M. Jude Egan, Family Lawyer
One in five American workers filed for first-time unemployment benefits from mid-March to April 25, according to the most recent report from the U.S. Department of Labor,
“At the highest of levels of unemployment following the 2008 financial crisis, there were 15.3 million jobless Americans. But in the past five weeks, a staggering 26.5 million workers have already filed jobless claims,” wrote Lance Lambert in “Real Unemployment Rate Soars Past 20%” (Fortune, April 23, 2020).
Prior to March 13, there were already 7.1 million unemployed Americans, according to the U.S. Bureau of Labor Statistics. “When the figures are combined, it would equal more than 33 million unemployed, or a real unemployment rate of 20.6% – which would be the highest level since 1934,” Lambert continued.
Just one year ago, the unemployment rate was 1.1% and the volume was 1,659,123.
This unemployment crisis means it is time to start thinking about child and spousal support orders. Courts are closed across the nation, making it more difficult to seek modifications of orders already in place. In California, the Court does not have jurisdiction to modify support orders until a party has sought to modify them by filing a formal motion (Fam. C. 3653 – the later of the motion to modify support or the date of unemployment). But many clerks’ offices are closed and are not processing new motions.
What does a support obligor do?
Child Support Rights and Responsibilities in a Pandemic-Broken Economy
Unemployment, of course, cuts both directions. Support recipients are equally likely to be unemployed in the current environment, and both parties may find themselves unemployed in an economy where unemployment has reached 20% with no real sign of slowing. There is a small amount of financial relief heading out at least in some states, such as California, where there is a short-term moratorium on both evictions and foreclosures, but these protections are not nationwide and they will not last forever. Even still, a moratorium on foreclosures and evictions only covers a place to live. Additionally, in California, unemployment benefits are paid out at a maximum of $450 per week based rising to as much as $1,050 per week (with $600 in additional Federal unemployment for the first four months of the pandemic) if a worker earned the unemployment maximum in their highest-paid quarter over the prior 15 months (usually it is the four quarters prior to the immediately prior quarter a person worked).1 This maxes out at $4,515 per month for four months – after that is anyone’s guess in terms of paying out unemployment claims.
With a short moratorium on cost of housing (perhaps) and a wage boost from the Federal government for four months, support may not be an immediate concern for some – but for others, the need will grow and the ability to pay will shrink. This means we are going to need to begin rethinking support obligations.
In most jurisdictions, child support payments are an obligation that continues until a child reaches the age of 18 and graduates from high school or reaches the age of 19. Spousal support payments are until the death of either party, the remarriage of the supported spouse or further order of the court. In either support scenario, the parties need a court order to get a change in support amount.
Child Support During the Last Recession
In 2008, when unemployment reached 10%, Courts were slow to react to market changes and ordered people to find jobs leaving support numbers unchanged. Support arrears (which courts in California are powerless to reduce without an agreement) accrue interest at 10%, leaving the payor parent financially devastated when they get back to work. Willful failure to pay support can lead to a finding of contempt and a stay in county jail (five days per monthly violation in California). It is a defense to contempt in California that one could not pay support, but it will not offset the orders to pay support – in other words, a party is obligated to pay support by court order until one asks for – and a court grants – a modification.
On the other hand, the receiving party has no use for an arrears order plus 10% interest when they need to put food on the table. If a parent begins receiving cash aid from the state, they substitute the state as the payee and begin garnishing wages, intercepting tax refunds, and levying bank accounts (in addition to potentially bringing contempt motions). This leaves the supported parent short cash each month that they need for the children, including ensuring housing and food security for them, and garnishments make it impossible for the supporting parent to catch up.
The International Monetary Fund (“IMF”) called “The Great Lockdown” the “Worst Economic Downturn Since the Great Depression” – if the virus peaks in the second quarter and fades in the second half of 2020. If the pandemic continues into 2021, the crisis will be of previously unseen magnitude.
Planning for Recovery Could Include Retroactive Modification of Child Support
We must begin to plan for recovery now.
The legislature must pass a stopgap measure that permits the Court to consider retroactive modification of support to the date a party became unemployed and print a basic support table that uses state plus federal unemployment compensation numbers running across the top and sides so that we can determine a guideline support amount based on unemployment compensation.
The California Judicial Council promulgated Emergency Rule 13 on April 20, 2020, which provides that support modification requests will be retroactive to the date that unconfirmed copies were served on the opposing party. This was in reaction to the fact that many clerks’ offices are understaffed and cannot date stamp new filings. Normally, a filing is served after the Court has date-stamped it. This is a good rule but does not go far enough to deal with what will be a crush of new filings over this. Why? Many attorneys’ offices are not open to accepting new clients during the stay-at-home orders, which makes engaging counsel difficult. Filing a child support modification request is a technical filing beyond most self-represented parties’ abilities.
Because California child support is calculated based on the differential in incomes and timeshare percentage (the more time the payor spends caring for the children, the less they pay in support), support should be based on a set timeshare of 30%. Courts should be permitted to later revisit these numbers once the crisis recedes. Other states do not necessarily follow the California support guidelines.
In states that do not factor in timeshare percentage, it actually becomes relatively simple to put out a guideline support calculation based on the incomes of the parties and the number of children. By setting forth a presumptively correct child support amount where the parties are both getting unemployment compensation or where one is continuing to work and the other is unemployed, state courts will minimize a crush of filings for not only support modifications but also for state cash aid and food stamps.
Child Support in a Pandemic-Broken Economy: Assistance (and Sanctions) for Self-Employed Parents
I have received half a dozen calls from my existing support paying clients seeking to modify their support. All but one of them had paid $0 in March, despite having some unemployment income and not having a housing payment. I believe this responds to a psychological desire to ensure that their own basic needs are met and not a nefarious desire to punish the other parent or fail to provide for their children.
This temporary legislation could also help self-employed people who do not get unemployment payments, but have seen their business drop-off – perhaps to nothing – while they wait (and pray) for stimulus loan checks.2 The table would give a mandatory payment amount based on income using a 30% custodial timeshare and allow either party to seek a retroactive “prove up” or modification later. Thus, if a self-employed payor party paid support during the pandemic crisis as though they earned $5,000 per month, they could be forced to “prove-up” their income during this time period with the pain of paying a sanction if they deliberately took advantage of the crisis to pay a smaller amount.
If we leave the system as it is, we can learn from the financial meltdown in 2008-2009 and the fallout that lasted several years thereafter wherein unemployed payors neither filed motions to modify their support nor paid support. They found themselves many thousands – if not tens of thousands – of dollars in arrears gathering interest at 10% per year. This is a disaster for economic recovery and does not reflect the true reality of the funds available for support.
Particularly hard hit in this crisis are hospitality, food service, tourism, and luxury items, all fields that are dominated by women shift-workers, who tend to be less financially secure and more likely to have children at home a greater percentage of the time. If these sectors are slow to recover, as we have every reason to believe they will be with fewer people wanting to dine out or travel without knowing where “hot spots” will flare up next, unemployment will continue. Men working in the male-dominated construction trades, which in California are still an “essential” service may get back to work more quickly assuming investment in new building, but this may still take some time.
Swift Action is Needed to Prevent Months of Uncertainty in Child Support Cases
Rather than a snarled-up court system, we will need the legislature to act to create a mandatory support table based on 30% custodial timeshare are unemployment compensation. If the legislature cannot or will not act on a mandatory payment, then, at a minimum, the legislature should establish that the Court will retain jurisdiction to the date of unemployment of the party.
My concern is that the courts will be snarled up for months, dealing with higher priority domestic violence restraining orders and child custody issues. There could be months of uncertainty in child support cases.
Support payors or recipients who need a modification of their support amounts because they have lost their jobs must file motions to modify their support payments immediately if the legislature does not act to preserve jurisdiction retroactively. This will almost certainly cause a major backlog of support cases for the court to consider and a rush to file for state cash aid, further taxing an already deeply taxed economic system.
Aside from the above proposed, my heart hurts for the world and especially for my clients as well as all those who are and will be affected by child support in this pandemic-broken economy. Really, what concerns me even more is how this trickles down to standard care for children, relationships between coparents, and the financial stress that can all-too-quickly turn into panic, eroding quality time children spend with each parent. We have to get the support numbers right to make sure that we are maximizing both parents’ ability to provide for their children. The lessons learned from the 2008-2009 financial meltdown give us an opportunity to set the course in a way that will make recovery from this crisis less painful.
1 www.edd.ca.gov/pdf_pub_ctr/de8714ab.pdf, accessed April 20, 2020.
2 Loans are not considered income under California’s support system. Therefore, a PPP or EID Loan from the Small Business Administration is not income for the purposes of paying support, although they may keep a small business afloat.
M. Jude Egan Ph.D., JD, is certified by the State Bar of California, Board of Legal Specialization, as a Certified Family Law Specialist. He has published internationally in peer-reviewed legal, trade and academic journals. He has taught disaster law, business law, and federal and state entitlements at the Louisiana State University, E.J. Ourso College of Business. The National Voluntary Organizations Active in Disaster commended Jude for his work drafting the National Nonprofit Relief Framework for a policy paper ultimately adopted by the Centers for Disease Control. www.JudeEganLaw.com
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