Mills v. Mills and Alimony

Changes in employment have become increasingly common in New Jersey over the last few years. It is all too common now to hear of a layoff of workers who have pledged decades of their working lives to a particular company, with no prospects for new employment in sight. The effects of such a loss of employment can be wide-ranging. In the case of a New Jersey resident paying alimony, the change in employment may necessitate a modification of alimony payments.

In the case of Mills v. Mills, a husband and wife divorced in 2013 after a 13-year marriage. The parties’ divorce settlement agreement required that the husband pay 8 years of alimony in the sum of $330 per week. At that time, the wife worked as a teacher and earned $59,000 per year. The husband worked as a sales manager for a company selling flooring and earned income of around $108,000 per year. The settlement agreement was expressly based on the financial circumstances of the spouses at the time of the settlement, but did not state what would happen if there was a substantial change to the income of the parties.

The husband involuntarily lost his job of 12 years in January 2015 when his company restructured, eliminating his position. In April 2015 he accepted a similar position to his previous one, at the significantly reduced salary of $70,000 per year. Thus, the husband sought to reduce his alimony to better align with his new salary. The wife questioned the husband’s reasons for losing his previous job, asserted that he was underemployed, and asserted that she would undergo economic difficulty if alimony were to be reduced.

Amended New Jersey Statute - Factors for Modification of Alimony Order

In 2014 the New Jersey amended its alimony statute N.J.S.A. 2A:34-23(k). The statute sets forth a list of 10 factors to consider when attempting to modify an existing order of alimony in New Jersey.

Mills Two-Step Inquiry When Loss of Employment Results in Decreased Salary

The court noted that the amended statute does not provide a standard for how to deal with a situation such as the Mills’ where the payor of alimony obtains new employment at a significantly lower salary and seeks to reduce an existing alimony order over the alimony recipient’s objection. Therefore, the court provided a two-step inquiry in regard to the modification of one’s obligation to pay alimony in NJ:

First, was the payor spouse's decision in accepting a specific replacement job reasonable?

Second, if the acceptance of the replacement employment was reasonable, what if any resulting alimony modification should ensue that is just and reasonable to both the payor and payee, given their individual circumstance?

In the Mills case, for the first step of the newly announced inquiry, the court found that the payor’s choice of new employment was evenhanded under the circumstances. The court found that given the economic climate, while the pay was less than his old job, not taking the new job would have potentially left him unemployed for months. Taking the $70,000 job was an objectively reasonable decision. Taking the lower paying job also allowed the husband to honor the majority of his support obligations, whereas holding out for a higher paying job that may not come his way may have left him unable to pay for a time. Further, the court found that he was not voluntarily underemployed.

For the second step--what adjustments, if any, should be made to the alimony order--the court reduced the alimony from $330 per week to $250 per week. The court noted that this change in amount will place financial burden on both spouses, but that the decision is “financially equitable and reasonable under the totality of both parties' circumstances.”

Changes in employment can have substantial effects on divorced spouses with existing alimony orders in place. If you need assistance with alimony in NJ, please call the Law Offices of Peter Van Aulen today for a free initial consultation.

Sources

Mills v. Mills, Docket No. FM-15-1263-12

N.J.S.A. 2A:34-23(k)

---