If a person is earning less than what he is able to earn, you might consider that person “underemployed.” Child support is based on a person’s earnings, and thus if a person is underemployed, she is paying less child support than she should. The North Dakota Child Support Guidelines has a solution for this, which is to impute income to a person based on their earning potential, instead of what the person actually earns.

The Definition Of Underemployment

The Child Support Guidelines states that an obligor is underemployed if his “gross income from earnings is significantly less than this state’s statewide average earnings for persons with similar work history and occupational qualifications.”

Therefore, you must first determine the person’s work history and occupational qualifications. Does the person have an electrician’s license? Has she worked for years as an elementary teacher? Does he have a degree in mechanical engineering? Is she licensed as a pharmacist?

Then you must reference the statewide average earnings in North Dakota for persons with the occupation for which the obligor is qualified. The best data for this is compiled in a table called the “State Occupational Employment and Wage Statistics” which is maintained by the U.S. Bureau of Labor. The North Dakota Supreme Court has upheld using these statistics as well as those put forth by the Job Service of North Dakota.

Now compare the obligor’s earnings to the statewide average earnings for persons with the occupation for which the obligor is qualified. Is the obligor earning significantly less? If so, the person is underemployed.

Presumptive Underemployment

“Significantly less” than the statewide average earnings is a bit of an ambiguous term. The Child Support Guidelines provides some clarity by defining what is “presumptively underemployed.” A person is presumptively underemployed if they earn less than the greater of: 167 times the federal hourly minimum wage (which is $7.25 as of January 2024) or 6/10th the statewide average earnings for persons with similar work history and occupational qualifications.

Let’s say that Jane has worked her whole career as a welder, but due to stress has recently quit her prior job and started bagging groceries and earning around $30,000 per year doing so. The statewide average earnings for welders in North Dakota is $58,130, and 6/10ths of that amount is $34,878. The federal hourly wage times 167 times 12 (to get an annual amount) equals $14,529. First compare the federal minimum wage amount to the 6/10th of the statewide average earnings for welders. The greater amount is $34,878. Therefore, we compare Jane’s income of $30,000 to the 6/10ths of the statewide average earnings of $34,878, and we can see that Jane’s gross income is less. Therefore Jane is presumptively underemployed.

It’s worth pointing out that Jane could still be determined to be underemployed if she earned more than $34,878, but the court would not presume her to be underemployed.

Imputing Income

If the obligor is underemployed, he will be imputed income. The amount of imputed income differs in each case. A person must be imputed whatever is greatest from the following three options:

1. 167 times the federal hourly minimum wage times 12.

2. 6/10ths the statewide average earnings for persons with similar work history and occupational qualifications.

3. 90% of the person’s greatest average gross monthly earnings in any twelve consecutive month period in the current calendar year and the two previous calendar years.

Using Jane as our example, let’s assume Jane earned $42,000 from January 1st to December 31st last year, and that was the most she’s ever earned. We know that subdivision 1 (167 times the federal minimum wage) is $14,529. We know from our calculations above that subdivision 2 (6/10ths the statewide average) is $34,878. So far, subdivision 2 is the greatest. Now we must calculate 9/10ths of $42,000, which equals $37,800. This number is the greatest of the three, and therefore is the number which will be imputed to Jane. Jane will have an actual income of $30,000 and will be imputed $7,800 in income due to her underemployment, for a total income of $37,800, which is the number upon which her child support will be based.

Conclusion

If you have questions regarding this topic, then seek the advice of a family law attorney. Contact the SW&L family law team at 701-297-2890 or email us at: info@swlattorneys.com.

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