Two cases this month discussed the treatment of employer-provided fringe benefits in child support determinations.
In his May 14, 2012 decision in K.W. v. M.W., Onondaga County Family Court Judge Michael L. Hanuszczak rejected a father’s objections to the determination of a Support Magistrate. While doing so, Judge Hanuszczak considered the impact of certain union fringe benefits when determining income for Child Support Standards Act purposes. The father, a member of the International Association of Heat & Frost Insulators andAllied Workers Local 30, claimed his income was the union base rate of $28.55 per hour. The Support Magistrate upheld the argument of the mother that the court should also impute the value of contributions to various union benefit plans, bringing the total to $45.35 per hour. Those union plans included the pension fund, welfare fund, annuity fund, apprenticeship fund, industry advancement fund, and LMCT [presumably a Labor Management Cooperate Trust Fund]. Judge Hanuszczak stated:
As a general rule, the Court finds that such benefits must be regularly or periodically received by the recipient or must reduce the recipient’s living expenses to be considered as a part of a parent’s gross income.
Thus, for example, the amount contributed by an employer to the employee’s pension fund, 401k account, or health insurance premium would not be imputed to gross income for the purpose of calculating child support. However, an allowance for a vehicle or cell phone which is used for personal use would be considered for inclusion in the gross income amount. Such a rule would be applied by the court on a case-by-case basis taking into consideration the evidence adduced at trial on that particular proceeding.
Judge Hanuszczak’s rule was dicta, remarks not necessary to his determination affirming the Support Magistrate’s holding that the father was not entitled to a downward modification of his support obligation. That result was supported by “other evidence in the record at trial.” The father had failed to demonstrate an adequate change of circumstances to warrant a reduction of his child support obligation.
On May 23, 2012, the Appellate Division, Second Department, in Bershadskaya v. Nemirovsky reversed the determination of Kings County Family Court Judge Arnold Lim which had upheld the order of Support Magistrate John M. Fasone. The Family Court rulings determined that additional income should not be imputed to a father. To the contrary, when ordering that a new hearing be held, the Second Department stated:
Where the father admitted that his company paid for him to lease a late model BMW, where BMW Financial Services documents revealed that he was a general manager with a gross annual salary of $95,000, and where he failed to submit compulsory financial disclosure, it was an improvident exercise of discretion for the Support Magistrate to fail to impute additional income to the father.
The Second Department did not specifically hold that all, or any specified portion of the BMW lease payments must be added to the father’s income; only that the Family Court was incorrect when finding that additional income should not be imputed to the father.
The treatment of fringe benefits is an uncertain area. Courts have included the value of employer-provided housing, but only if residency is not mandatory. Massey v. Evans (4th Dept. 2009), C.H. v. S.H. (Sup. Schenectady 2012). It may be proper to add other benefits such as automobile insurance, gas and oil payments, vehicle maintenance and repair costs, and personal expense allowances. Skinner v. Skinner (241 A.D.2d 544, 661 N.Y.S.2d 648 [2nd Dept. 1999]). Before-tax health insurance deductions have been imputed. Bellinger v. Bellinger (3rd Dept. 2007). Mandatory public employee retirement contributions should not be considered. Ballard v. Davis, 259 A.D.2d 881, 686 N.Y.S.2d 225 (3rd Dept. 1999).
Judge Hanuszczak’s general rule seems fair and workable. Does the fringe benefit reduce living expenses? Is it regularly or periodically received? When the family was together, was it a benefit that directly or indirectly enabled more money to be available for the support of the child? Is it fair to hold that the benefit puts money in the parent’s pocket for which the child should now benefit?