Being laid off can have a significant impact on a person's mental, emotional, and financial well-being. Layoffs can also complicate the financial and personal aspects of your divorce.
At first glance, layoffs and divorce may appear to be two unrelated things, but there can be a connection between the two. This article aims to provide you with critical information on how layoffs can affect divorce proceedings, especially as it relates to spousal support payments.
Layoffs Sweeping the US | Has There Been an Increase in Layoffs?
The pandemic and its economic fallout have caused countless job losses in many industries, including the tech sector. The tech industry has seen a dramatic increase in layoffs in 2023. According to CNBC, job cuts have soared to 270,416 so far this year, an increase of 396% from the same period a year ago. This is especially true for tech companies, with big names such as Amazon, Microsoft, and Google parent Alphabet all announcing layoffs.
Even smaller startups and mid-sized firms have been affected by the wave of job losses. As of March 2023, more than 100,000 U.S. tech employees have lost their jobs this year and it is expected that these layoffs will be completed by the second quarter of 2023. It is clear that the tech industry has been hit hard by the economic downturn and it remains to be seen how long it will take for companies to recover from this difficult period.
In 2022, Netflix also laid off thousands of employees in multiple rounds of job cuts. This is part of a larger trend of declining subscribers for the streaming giant. The layoffs represent around 3% of Netflix's workforce, which includes 11,000 full-time employees.
The decision to lay off staff was made due to slowing growth and the impact of the pandemic on its business. Netflix is not alone in this situation; many other companies have had to make similar decisions as they face an uncertain economic future.
Layoffs & Divorce: What’s the Connection?
Job loss can significantly impact a marriage, and in many cases, it can lead to divorce. The stress, anxiety, and financial strain that come with layoffs can often cause strain on a relationship. The loss of stability and income can lead to disagreements about finances, and other important factors in a relationship.
Being laid off can also have a significant impact on a person's mental health and well-being. It can cause feelings of shock, anger, distrust, doubt, frustration, and escapism. Layoffs can lead to elevated stress, anxiety, and an increase in low self-esteem due to the stigma of being out of work and losing one's daily routine. Research has shown that unemployment is linked to depression, anxiety, and other mental health issues.
These emotional effects can have an impact on your familial relationships. According to research included in the Harvard Business Review, unemployment can affect your parenting; specifically, parents (especially men) may struggle with not being able to meet the same financial needs or desires of their children (i.e. a new bike, a gaming system, a puppy, etc.). However, some parents see unemployment as a benefit as they are allowed to spend more quality time with their children.
If you are laid off during your divorce, you may worry about whether you will have to pay spousal support and if the support will be calculated based on your previous income. However, it is important to note that the court will consider your change in income when calculating or determining whether to award alimony.
Layoffs & Spousal Support
During many divorces, if one spouse earns significantly more than the other, the lower-earning spouse will request to receive spousal support. They may petition the court to receive temporary support, which will last the duration of the divorce, and/or long-term spousal support, which is made at the end of the divorce proceeding and meant to help a spouse financially post-divorce.
Spousal support is intended to help a spouse meet their basic needs as well as maintain the standard of living the couple had during their marriage. Long-term support is often awarded when a spouse earns significantly more than the other party or the marriage was considered long-term.
In such cases, a judge may award spousal support to the lower-earning spouse to help bridge the income gap. However, if the income of the higher-earning spouse significantly decreases due to a layoff or any other reason, it can impact the amount of support the lower-earning spouse receives, as the court will consider the paying spouse’s current income and ability to make payments. If a layoff turns a higher-earning spouse into a lower-earning party, that can also impact who has to pay support as well as whether support will be awarded.
Fired vs. Laid Off vs. Furloughed: What’s the Difference?
Being fired, laid off, and furloughed are all terms that refer to a change in employment status:
- Being fired means that an employee has been terminated from their job for any number of reasons involving violating their contract, failing in their job duties, etc. When a person is fired, they are being let go because they are at fault.
- Being laid off means that an employee is being dismissed at no fault of their own; layoffs are usually the result of changes within a company or other external factors (like the economy).
- Being furloughed means the employee is still employed by the company but cannot work and cannot receive pay. Furloughs are typically a temporary restructuring, while layoffs involve permanent termination.
How Job Loss Is Treated During Divorce
It is important to differentiate between layoffs, furloughs, and firings because the court will consider the cause of the change in your employment status. They will want to understand whether your job loss is something in or beyond your control. If it is found you quit or lost your position because of misconduct, the court may still hold you responsible for the same level of financial responsibility.
This differentiation is also important as you should understand whether it's a temporary or permanent job loss. A temporary layoff (or furlough) would provide an opportunity for the spouse to get back to work and is less likely to affect spousal support. If a permanent job loss occurs, it could lead to changes in support payments.
It is also important to note that the court may allow alimony payments to be taken from unemployment benefits. Money received through unemployment insurance is considered income and therefore subject to taxation. Additionally, if an unemployed spouse has other sources of income such as investments or rental properties, they may still be required to make alimony payments even if they are not receiving unemployment benefits.
Discuss Your Case with Our Firm
At Fenchel Family Law PC, we are equipped to help clients understand the impact job loss can have on their spousal support case. Known for our experience and dedication to excellence, you can trust our team to help you determine whether alimony may be awarded, calculate potential alimony payments, and develop a case strategy that supports your interests.
If you are involved in a divorce and suffer a job loss, Fenchel Family Law PC can help with your spousal support case. Call (415) 650-1112 to schedule an initial consultation today.