A Financial Experts Role In Employment Litigation

Financial experts play a critical role in wrongful termination cases and other types of employment litigation, particularly in estimating damages. Key areas in which experts can get involved include:

Calculating base earnings. The expert must consider nonrecurring payments, seasonal fluctuations and other factors that affect the calculation of base pay. And if the plaintiff is unemployed for an extended time, the expert may need to project base pay for post-termination periods. This involves analyzing historical earnings, employer practices, industry or government information, and inflation data to select an appropriate earnings growth rate.

Valuing benefits. A sizable portion of an employee total compensation comes from benefits, which include health coverage and retirement plans, as well as smaller perks, such as company cars and clothing allowances. Identifying benefits and estimating their value is a critical and challenging part of the damages calculation.

Determining the loss period. The loss period, which can range from several months to the plaintiff entire work life, has a significant impact on the amount of damages. Selecting an appropriate period requires analyzing a variety of factors, including the plaintiff likelihood of securing comparable employment and the need for specialized training to qualify for a new job.

Evaluating mitigation opportunities. Typically, a plaintiff is required to mitigate his or her damages in employment cases. If the plaintiff hasn't found another job by the time of trial, the financial expert will estimate the compensation the plaintiff could reasonably have earned by taking another job.

Discounting to present value. Once the expert determines lost earnings and the loss period, he or she will select an appropriate interest rate (often based on local statutory or case law) to discount projected earnings to present value.

Calculating damages in employment litigation is a complex task. That why it a good idea to retain a qualified expert early in a case to weigh your options and evaluate your evidentiary needs.