What is “Earning Capacity”? Hermitage Spousal Support Lawyer

Click below to share this on social media:

Lisa Vari on G+

In Pennsylvania Support cases where it is argued that one party is not earning as much as they could be, a vocational expert can be utilized to provide testimony and/or a report as to a party’s earning capacity. At the Court’s discretion, a party’s earning capacity can be utilized to determine the amount of support that party (or the opposing party) may be entitled to. But for many, the term “earning capacity” is ambiguous as it isn’t really clear what is being considered in the determination of one’s earning capacity. In this quarter’s issue of Family Advocate magazine, Edward M. Mazze, Ph.D. and Candace E. Mazze, Ed.D. pull back the curtain to explain what vocational experts actually consider in formulating their opinion of a party’s “earning capacity” in their article “Putting a Vocational Expert to Work in a Divorce Case.”

Here are six factors that the authors highlight as points of consideration for determination of earning capacity:

1. Three types of earnings – actual earnings (what an individual is currently earning), expected earnings (what an individual is expected to earn) and earning capacity (what an individual is able to reasonably and realistically earn.

2. The ability and opportunity to find work – factors such as age, occupation, education, skills, health, family situation, earning history, geographical location, industry and the state of the economy can all influence whether an individual is able to find employment that compensates them according to their skills, education and training.

3. Identifying jobs/occupations by job description – suitable jobs for an individual are determined by reviewing the individuals abilities and skills (gathered by personal interviews and a review of the individual’s resume or CV; recognizing specialize skills, academic degrees, licenses and certifications; studying the individual’s work history; and understanding the qualifications required in various occupations based on data supplied by federal and state agencies as well as professional associations.

4. Recognizing the barriers to obtaining employment in occupations – barriers to employment in a job or career can arise due to age, gender, geography, changes in the job market, special education requirements and lack of funds need to maintain qualifications. Barriers can also arise due to the personal behavior of the individual, such as having a negative attitude, lack of focus, under-developed skills or poor self-marketing skills.

5. Appropriate compensation – whether or not an individual is being appropriately compensated for their work can be determined by identifying jobs and comparing the job title to surveys reporting compensation information on a semi-annual or bi-annual basis. Factors such as the background of the organization collecting the information, the methodology used, the date the data was collected and the sample size are considered when selecting compensation surveys.

6. Compensation history – an individual’s compensation history is revealed by reviewing federal and state income tax returns for the previous three (3) years. When tax returns aren’t available, the individual’s last salary is used as a “best estimate” of earning capacity.

Contact our office today to set up a consultation with one of our knowledgeable and experienced Pennsylvania spousal support attorneys to learn more about your rights and obligations under the support law in PA.