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How Much Does Divorce Cost American Companies?

Nanci A. Smith, Esq.

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. 

The Long Arm of Divorce 

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 and having a hard time staying focused on the job. 

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. 

Company Recourse 

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. Although 10% of their workforce goes through a divorce every year, most companies don’t have plans to support these employees.

 Even though a divorce might seem like a personal problem facing an employee, which it is, it also 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 educate themselves on the impact of divorce, and receive training in non-adversarial divorce options, so that they can reach out as soon as possible and offer sound counsel to them about their options. 

If an employee has been on their spouse’s health insurance 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, but it is still a stressor for the employee.  You can help lessen their fear and anxiety. If a spouse is on an employee’s plan, sharing the idea of continuing coverage under COBRA, and the cost, will be valuable information to the employee.

 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. This often random and short notice time off also impacts others on the team. Sharing about Collaborative Divorce with an employee might allow the employee more control over their schedule, so they could plan a divorce meeting, after an important business deadline has been met.  Collaborative divorces do not involve the court or the court schedule, over which the employee has no control. 

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. Consider adding a Collaborative Divorce consultation or representation as part of your employee assistance plan. Employees are more productive when they are not stressed about their divorce process.    

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.   

The Collaborate Divorce Advantage 

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 trauma informed divorce 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 and maintain productivity.

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Written by Nanci A. Smith, Esq.
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Nanci A. Smith, Esq.
Nanci A. Smith, Esq., is an attorney licensed to practice in Vermont and New York. She is the chair of the Collaborative Divorce section of the Vermont Bar Association, a leader in her collaborative divorce practice group, and a member of the International Academy of Collaborative Professionals. She frequently writes and talks about divorce, family law, ethics, and collaborative divorce practices. She believes that a good divorce is possible when you show up for it with humility, compassion, and the correct support. Smith is the author of Untangling Your Marriage: A Guide to Collaborative Divorce (Rowman & Littlefield Publishers, Oct 11, 2022).


Nanci A. Smith is an opinion columnist for the CEOWORLD magazine. Connect with her through LinkedIn. For more information, visit the author’s website.