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Gig economy stands in way of child support

Wednesday, June 20, 2018

Many people in Texas work as independent contractors, picking and choosing what jobs to temporarily take on. The new gig economy comprised of independent contractors performing temporary jobs, for example, have allowed parents to escape their support obligations and complicated enforcement by state officials.

Courts order child support when parents separate or divorce to assure that the child's basic financial needs are met. There is approximately $114 billion in unpaid child support across the country.

States collect around 70 percent of support payments by withholding wages from paychecks. The only way to collect the wages of a gig worker, such as an Uber driver or Airbnb renter, is for state officials to have wage information about a person owing child support so that their wages that can be garnished. This requires the employer's cooperation.

States traditionally exempted these contract workers from reporting requirements. Texas, however, changed its law in 2015 to require contractors to report new hires to a child support database that is used to locate a parent's place of employment for parents. This information is essential for issuance of enforcement orders and for withholding income.

Even in states where employers must report contractors, companies such as Uber and Lyft are not complying with these reporting rules. Other states report that they have few ways to make these employers comply and that there are few penalties to impose.

Working as a contractor to hide income from child support and pay other obligations such as taxes is not new to the gig economy. However, more than 2.5 million adults in this country participate in the gig economy each month and estimates show this may double by 2020. The percentage of workers who are contractors grew to 15.8 percent in 2015 from 10.1 percent in 2005. Jobs in the gig economy are also more difficult to track because they last for shorter periods.

State officials and attorneys locate this income by reviewing tax returns, cash flow in bank accounts and compare their reported income to their actual lifestyle and purchases. Parents have inadvertently disclosed their income on social media by boasting about extravagant purchase such as cars or trips.

An attorney can help parents with enforcement of child support orders. They can also help seek orders that are reasonable and more likely to achieve compliance.

Source: Huffington Post, "Economy Gives Child Support Scofflaws A Place To Hide" Dec. 1, 2017

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