Can a court impute overtime income in calculating child support? This issue was addressed by the Michigan Court of Appeals on September 10, 2020, in its opinion in the case of Olivero v. Olivero. In the Olivero case, the father objected to a Friend of the Court recommendation which imputed overtime income to father in calculating child support. The trial court affirmed the Friend of the Court recommendation however, the Court of Appeals reversed.
Child Support and Overtime Income
In the Olivero case, the father regularly worked overtime but
ceased doing so in 2018 to “spend more time with his family”. As a
result, his income was reduced by $20,000 per year. At the trial level, the
father testified that he used to work a lot of overtime primarily to pay
household bills but was tired of doing so because it was stressful and he
preferred to work 8 hour shifts instead of 16 hour shifts. The trial
court reasoned that the father voluntarily reduced
his income to reduce his child support obligation. However, on appeal the
Michigan Court of Appeals reversed the trial court’s decision.
The Child Support Calculation Rules
The child support calculation rules are found in the Michigan Child Support Formula Manual.
In determining child support, the trial court must generally follow the formula set forth in the MCSF Manual, which is published by the FOC pursuant to legislative mandate.
Pursuant to the Michigan Child Support Formula Manual:
[i]ncome includes . . . overtime pay . . . from all employers or as a result of any employment . . . .” 2017 MCSF 2.01(C)(1). Such income is determined on the basis of “[a]ctual earnings for overtime.
The MCSF Manual also permits income that a parent could potentially earn to be imputed to the parent under some circumstances. Specifically, “[w]hen a parent is voluntarily unemployed or underemployed, or has an unexercised ability to earn, income includes the potential income that parent could earn, subject to that parent’s actual ability.” 2017 MCSF 2.01(G). The amount of potential income imputed should be sufficient to bring that parent’s income up to the level it would have been if the parent had not reduced or waived income.” 2017 MCSF 2.01(G)(1).
However, pursuant to the MCSFM 2.01(G), the amount of overtime income (potential income) cannot be based on more than a 40 hour work week.
It is therefore not permissible for a court to impute overtime income if doing so would result in the parent working more than a 40-hour work week. However, if the parent is currently working overtime, his/her actual income can be used in calculating child support, even if it results in working more than 40 hours per week.
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By: Daniel Findling
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