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When a court finds that an employee was wrongfully terminated, the employee may receive damages for back pay, front pay, and benefits. An economist can calculate these pecuniary damages.
Pecuniary damages may be calculated for a limited duration if the plaintiff can reasonably be expected to find the same or similar employment with another firm. However, there are situations when the pecuniary damages period may be much longer. Here are examples of situations with extended damage periods:
- The plaintiff has suffered permanent damage to his or her reputation, greatly limiting opportunities to find the same or similar job.
- The plaintiff lost retirement benefits or stock options that cannot be replaced at a similar job with another employer.
- The plaintiff lives in a labor market where no other employer has a similar position.
In these cases, damages may extend through the Plaintiff’s work life expectancy and retirement. When the facts show pecuniary damages may last longer than a normal job search period, both the plaintiff and defendant may need two experts: an economist and a vocational consultant.
The Role of an Economist in Calculating Pecuniary Damages
Calculating pecuniary damages involves determining:
- the base pay at time of termination,
- expected changes in base pay due to expected promotions and raises,
- the value of fringe benefits, including retirement plans, bonuses, and stock options.
Front pay and future benefits must be reduced to discounted present value, and back pay damages may need to be adjusted for interest. Counsel may want tax adjustments of all damages in considering potential settlements. RPC’s economists and accountants can perform these calculations.
The Role of a Vocational Consultant in Calculating Pecuniary Damages
Pecuniary damages are offset by any interim earnings and benefits, workers’ compensation benefits, and unemployment compensation benefits the plaintiff received. The plaintiff must make reasonable efforts mitigate damages. Vocational consultants are better qualified than economists to testify on these questions that affect future earning capacity:
- What are the geographic boundaries of the plaintiff’s labor market?
- What similar jobs are available in the labor market from employers other than the defendant?
- If there are no similar jobs in the labor market, what available jobs is the plaintiff able to hold?
- How do the wages and benefits in jobs differ from the pre-termination job?
- What training or education would reduce pecuniary damages?
- Did the plaintiff make a reasonable job search?
- Has the plaintiff made reasonable efforts to obtain further education to qualify for available jobs with similar earning capacity?
By answering these questions the vocational consultant can opine whether the plaintiff has made reasonable efforts to mitigate damages. The vocational consultant also can give the economist opinions on the plaintiff’s duration of unemployment and earnings from future employment to use in calculating pecuniary damages.
RPC understands each wrongful termination case has its unique set of facts. Our vocational consultants, economists, and accountants can analyze those facts to make reasonable estimates of any pecuniary damages plaintiff.
Contact us for a preliminary review of documents and a discussion of a wrongful termination case at no obligation.
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