Employment Benefits

In San Diego, spouses can have many different types of employment benefits: stock options; termination benefits; fringe benefits, "golden parachutes"; bonus income; consulting agreements; gifts from employer; vacation benefits; mortgage subsidies; life insurance; deferred compensation; disability; health insurance; education; term or whole life insurance; incentive pay; veterans education {GI Bill}; worker's compensation and many others. This is a very complicated area of the law and an experienced San Diego employment benefits attorney is needed to analyze these benefits and make a determination as to whether they are characterized as community property or income. This is significant since, if no child support or spousal support is at issue in the case, the characterization of these employment benefits as income and not community property would mean that the non employee spouse would have no community interest in these benefits.

Stock options are a very common employment benefit. The initial analysis is when the stock options were acquired and for what purposes. The date the stock options are earned is the date which is used for characterization purposes. This can become complicated since some stock options are for the purpose of attracting the employee and some stock options are for the purpose of retaining employees. In addition, a stock option may be granted after the date of separation however may be for services which were performed by the employee spouse during the marriage. An expert may be needed to analyze the community portion if this is characterized as community property. The additional issue of vesting is also a consideration. Some stock options vest at one period of time and some vest in monthly periods which can be as long as five years. As such, in the five year every month vesting example, there would be sixty different vesting periods for the stock options. There is the always difficult task of possible apportionment if the stock options were granted during marriage but are for the employee to be retained post date of separation. There are many other issues which surround characterization and division of stock options and an expert analysis is often needed.

Given the economy in San Diego, the issue of characterization of termination benefits is not uncommon in divorce and legal separation cases. Payments for termination benefits are analyzed by whether the right is earned during the marriage and is contractual. Termination benefits acquired post date of separation and not based upon a contract entered into during the marriage and the purpose of which are to replace future loss of earnings are normally characterized as separate property. This analysis, if support is an issue in the case, would then be as income and not as a division of a community property interest. If there was a contractual obligation, on the other hand, which was entered into during the marriage, then there may be a community property component for division to the non employee spouse in the divorce or legal separation proceeding. Some of the factors which the Court will consider are the following: is the payment based on the number of years that the employee worked for the company during the marriage; whether the payment will go to the employee's beneficiary in the event of death of the beneficiary as with an employee based life insurance policy and many others. Again, this is a very complicated issue.

In San Diego, many employees obtain "fringe" benefits or "perks" from their employer. These can take the form of expense accounts, mileage reimbursement, auto allowance or vehicle provided for personal use; business meals; "golden parachute"; day care provided by employer and many others. The issue will be the characterization of the benefit. If the benefit is not community property and characterized as income, then this can be used for child support or spousal support calculations as these benefits reduce the employee's cost of living. Some benefits are normally not considered either community property or income and these include the following: health club provided by employer; earned time off or accrued sick pay which cannot be converted to cash; use of company facilities including free parking and many others. Again, a careful analysis is needed.

Bonus income is normally determined by the date of the payment. As such, if the bonus is received after the date of separation, it is normally considered income and not community property.

A consulting agreement could be characterized as community property if the value was for services during marriage even if the payment was post separation. This issue requires careful review of the consulting agreement and facts of the divorce or legal separation case.

Not all of the benefits listed above have been discussed in this article. If you have a question regarding the characterization or division of any employee benefit in your divorce or legal separation case, please set up an appointment at our office.

Phone Number: 800.769.4748