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You are here: Home / Blog / How Much Does Divorce Cost American Companies?

How Much Does Divorce Cost American Companies?

January 4, 2022 By Nanci Smith

We all know that divorce is an expensive proposition. According to one recent study, the average divorce can cost upward of $15,000 when you factor in attorney fees, court filing fees, and other common costs. And if you have disputes over finances, or disagreements around custody, that figure will be much, much higher.  

But did you know that divorces are costly for employers as well? Experts say relationship-related stress — especially divorce — can cause companies $300 billion a year.

Experts crunched the numbers and found that in the six months before and one year after an employee’s divorce, their productivity drops by 40%. It increases gradually every year after that, but it’s not until six years after a divorce that an employee’s productivity is where it used to be.

And divorce doesn’t just affect one employee. The productivity of their co-workers drops by 4%, while that of their supervisor drops by 2.5%. That’s because they have to take up the slack while their colleague is going through a difficult time.

In a widely cited report, financial analyst Rosemary Frank calculated that over the course of several years, the divorce of a single employee making $60,000 a year costs $85,934 in lost productivity. This includes absenteeism, presenteeism (being on the clock but otherwise checked out), and other factors.

Companies are usually equipped to handle other employee issues that can affect productivity. They have procedures about what to do if one of their team members has a death in the family, must take care of a child who is sick, or is suffering from a long-term illness. But although 10% of their workforce goes through a divorce every year, they don’t have plans about how to assist those employees.

Even though a divorce might seem like a personal issue facing an employee, it impacts the company where they work in many different ways. Because an employee’s marital status affects a wide range of issues — health insurance coverage, retirement and pension plans, and life and disability insurance — your human resources team should reach out as soon as possible to counsel them on their options.

If an employee has been on a spouse’s plan, they may need to apply for health insurance through your company. Fortunately, divorce is one of the qualifying life events, like getting married or having a baby, that allows an employee to apply outside of the usual enrollment period. If a spouse was on an employee’s plan, they may be eligible for continuing coverage under COBRA.

Whenever possible, your company should offer flexible work schedules for employees going through a divorce. They often must schedule their work duties around court hearings and attorney consultations that take place during normal business hours. A little leeway goes a long way in reducing stress.

Your HR team should inform employees about your leave policy. Allowing a team member to use their paid personal leave is a great way to show that you support them through this difficult time. Some companies also allow employees to take unpaid leave, if necessary.

If you have an employee assistance plan that includes psychological counseling, always inform the employee about it. A recent survey of workers who recently went through a divorce or separation reported that 42% felt their employers could have provided more mental health support.

Just as with any other person on your team, talk with an employee going through a divorce if you’ve noticed a drop in productivity. Ask what the company can do to help them get back on track. Before you suggest a course of action, take the time to listen to them. Sometimes they will already have a solution in mind, such as taking some time off to deal with personal issues.   

A traditional divorce is one of the most stressful events a person can go through. A contentious fight over how to split up assets or decide on custody of a child is the last thing most people want. That’s why some companies are suggesting alternatives like Collaborative Divorce.

Collaborative Divorce is a less-stressful option because it doesn’t end up in a courtroom. With the help of a team that involves specially trained attorneys, financial experts, and mental health professionals, both parties talk through a solution together. The only time that court is even mentioned is when it’s time to file the necessary paperwork and the final settlement documents. The actual divorce order comes in the mail.

Because it’s a less traumatic experience, a Collaborative Divorce may help an employee get through the process more quickly. It’s a win for the employee, who can get on with their life sooner. And it’s definitely a plus for a company that wants to find helpful ways to support their team members through difficult times.

Filed Under: Blog

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*All information displayed on the Nanci A. Smith Esq PLLC website is informational and shall not be deemed as legal advice. If you’re currently dealing with an individual legal situation, you’re invited to contact me through email or by phone. Until an attorney-client relationship has been established, I urge that you avoid sharing any confidential information.

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