In the wake of the COVID-19 pandemic, shelter-in-place and stay-at-home orders, many businesses have been forced to close their doors and millions of employees are being laid off or furloughed. As people are being let go, with no source of income in sight, the economic security of many Americans hangs in the balance. However, while work may have stopped for many, their child support and alimony obligations have not. For those with support obligations, the general economic strain of this crisis also comes with the added anxiety of not knowing how they will be able to pay child support and/or alimony while they remain unemployed. Those unable to meet their support obligations due to the sudden loss of employment face accumulating support arrears, court proceedings and the possibility of incarceration for non-payment. In the coming months, the New Jersey courts will likely face an unprecedented influx of alimony and child support modification motions for those who are seeking relief based on COVID-19 related unemployment, reduced earnings or the complete closure of their business.

In New Jersey, our courts have the authority to modify alimony and child support obligations upon a showing of a substantial change in circumstances. The party seeking the modification has the burden of proving that the changed circumstances have substantially impaired their ability to support themselves and continue to pay the support obligations at the same level. These "changed circumstances" are generally established by comparing the parties' financial circumstances at the time the motion for relief is made, with their financial circumstances as they existed when the alimony and/or child support obligations were last order or agreed upon. New Jersey case law further holds that a change in circumstances must be found to be permanent and continuing, not merely temporary, before a court can consider a modification of the support obligation. Furthermore, courts have routinely rejected requests for modification based on circumstances that are expected, but have not yet occurred. While both alimony and child support modification applications require a showing of a change in circumstances, the analysis for each is somewhat different. Moreover, there are different procedures and analyses for alimony modifications depending upon whether the alimony obligor is a W-2 employee or is self-employed.

For those individuals who are not self-employed, i.e., W-2 employees, and are considering seeking a modification of their alimony obligation, under the New Jersey alimony statute, our courts are required to balance 10 factors in determining whether modification is warranted:

1. The reasons for any loss of income;
2. Under circumstances where there has been a loss of employment, the obligor's documented efforts to obtain replacement employment or to pursue an alternative occupation;
3. Under circumstances where there has been a loss of employment, whether the obligor is making a good faith effort to find remunerative employment at any level and in any field;
4. The income of the obligee, the obligee's circumstances, and the obligee's reasonable efforts to obtain employment in view of those circumstances and existing opportunities;
5. The impact of the parties' health on their ability to obtain employment;
6. Any severance compensation or award made in connection with any loss of employment;
7. Any changes in the respective financial circumstances of the parties that have occurred since the date of the order from which modification is sought;
8. The reasons for any change in either party's financial circumstances since the date of the order from which modification is sought, including, but not limited to, assessment of the extent to which either party's financial circumstances at the time of the application are attributable to enhanced earnings or financial benefits received from any source since the date of the order;
9. Whether a temporary remedy should be fashioned to provide adjustment of the support award from which modification is sought, and the terms of any such adjustment, pending continuing employment investigations by the unemployed spouse or partner; and
10. Any other factor the court deems relevant to fairly and equitably decide the application.

Generally, there are numerous disputes that arise when considering these factors, especially as to the obligor's reasons for the loss of income, which often times warrant a hearing before the court involving witnesses, documentary evidence and possible expert testimony. However, there may be reasons to reconsider, under the current circumstances, whether a plenary hearing is necessary for modification based upon a loss of employment or reduction in income due to COVID-19. The facts underlying COVID-19 related layoffs or income reductions are not in dispute. There is no dispute that it was the government action closing down the country, a cause beyond anyone's control, that has left 26 million Americans unemployed and businesses drastically reducing salaries. Moreover, as the country remains "closed" due to government directives, there is very little ability for people to find employment and nearly impossible for an obligor to mitigate his or her unemployment status by finding a new job.

Importantly, for the W-2 employee, under the alimony statute, that individual cannot file an application to reduce their obligation until their unemployment or reduction in income has lasted for at least 90 days. As a result, many will be forced to wait three months, likely well into this summer, to file their applications for modification due to the COVID-19 related unemployment or income reductions. Fortunately, the alimony statute also provides that any reduction in the alimony obligation granted may be retroactive to the date of the loss of employment or reduction of income. With that said, those who have recently become unemployed or had their salaries significantly reduced, would be wise to utilize the 90 days to prepare, gather information and detail their circumstances in accordance with the factors the court will consider for modification.

For those who are self-employed and seeking to modify their alimony obligation, the analysis differs. First, there is no 90-day wait period for filing. Rather when a self-employed party seeks modification of alimony due to an involuntary reduction in income, the application must set forth an analysis of the current economic and non-economic benefits the party receives from the business as compared to these economic and non-economic benefits that were in existence at the time of the entry of the original order. The distinction between the W-2 employee and the self-employed individual is due to the fact that a business owner, unlike a W-2 employee, has control over the economic and non-economic benefits they receive from or through the business, including taking a distribution in lieu of a salary, and the payment of certain personal expenses and perquisites. While the self-employed alimony obligor is facing the same economic crisis as the W-2 employee, it is likely that the self-employed obligors will face longer-term effects, with many of them having to close their businesses indefinitely, which may warrant permanent relief from their support obligations.

For those parents seeking to modify child support, upward or downward, there is also no 90-day wait period. Importantly, under the current anti-retroactivity statute, unlike alimony, child support orders may not be retroactively modified with respect to any time period earlier than the date of the filing of a motion for a modification. Therefore, a parent who has lost his or her job or has faced a reduction in income due to the economic impact of this global pandemic should not delay the filing for modification of child support.

New Jersey case law generally provides that it is not enough that an obligor demonstrate a reduction in income, the obligor must also demonstrate how he or she has attempted to improve the diminishing circumstances. The pervading philosophy is that a person cannot find himself in a position where he has diminished or no earning capacity and expect to be relieved of support obligations. However, considering today's economic climate, an argument might be made that since government directives have closed businesses, triggering unemployment and left many with a dismal job market, that perhaps the Family Part, as a court of equity, should relax this duty to mitigate. Again, being mindful of the reality of the current circumstances and finding a solution that is fair and equitable to both parties. With that said, litigants should also be prepared to file documentation of employment efforts, unemployment benefits, any benefits provided through the CARES Act, including stimulus/rebate checks, payroll protection programs, and the additional $600 unemployment benefit, as evidence of efforts to mitigate the financial losses resulting from COVID-19.

The critical question that will face the court, counsel and litigants is whether or not COVID-19 related income reductions will be considered "temporary" and, therefore, warrant a denial of the modification request. No one can predict the timeline for economic recovery from this pandemic, and it could be well into next year before the country and particularly the New York-New Jersey area, experience sustained progress and a return to work. Moreover, we may not be looking at the same type of workplace and certainly not the same magnitude of a workforce post-pandemic, leaving those obligors who lost their jobs during this time unable to ever work at the same capacity they once did. There will also likely be many self-employed business owners whose businesses will not recover, and they will be forced to take different work, likely requiring the courts to come up with a new analysis. Our courts will need to be mindful of these realities and fashion equitable remedies on a case-by-case basis. Fortunately, for both W-2 and self-employed workers with alimony obligations, the alimony statute does permit our courts to enter a temporary order that it finds appropriate to assure the fairness and equity to both parties, allowing for an alimony obligation to be temporarily suspended, reduced on terms or paid in some amount from assets. In this unprecedented crisis, the court's ability to be creative and enter temporary remedies will be crucial to providing relief to those individuals who have suffered substantial financial loss due to COVID-19.

This pandemic has left the courts in uncharted waters. While there are clear statutory guidelines and case law precedent, it is not clear exactly how or if the courts will deviate. Courts, counsel and litigants will all need to be patient, empathetic and think outside the box in order to guide families through the legal system and take fair, reasonable measures toward recovery.

Brian P. McCann is a Certified Matrimonial Law Attorney and a partner with Callagy Law in Paramus. Kristen E. Marinaccio is an associate at the firm, where her practice is dedicated to family law.