A wrongful termination claim needs an economist when the gap between the compensation the employee would have received and the compensation they have replaced runs into the future, or when the lost compensation includes pension accruals, retiree health coverage, or equity that cannot be read off a pay stub. For a long-tenured employee the benefit losses can rival the wage loss, and for an older employee the front pay period can be the largest and most contested component. Counsel considering an economist should first assemble the compensation history and the benefit plan documents that show what the employee was accruing.
Checklist
Gather W-2s, pay stubs, and bonus statements for the years before and after the termination
Obtain the pension, retiree health, and equity plan documents that define what the employee was accruing
Document the job search and any replacement employment, including its pay and benefits
Identify the employer's practices for raises and promotions to support the but-for path
Note the employee's age, tenure, and occupation, which bear on the front pay period
Questions to ask the economist
How do you value the loss of pension accruals and retiree health coverage for a long-tenured employee?
What evidence supports the length of the front pay period for an employee of this age and occupation?
How do you treat replacement work that pays less or carries fewer benefits?
Can you produce a preliminary range before the full engagement?
Timeline
One to two weeks to a preliminary back pay and benefits view from the pay and plan records. The full report follows the retention and records phases.
Required documents
W-2s, pay stubs, and bonus or commission records
Pension, retiree health, and equity plan documents and account statements
Records of the job search and replacement employment
Personnel records bearing on pay progression and expected tenure
Common pitfalls
Overlooking the benefit losses of a long-tenured employee, which can exceed the wage loss
Asserting a front pay period with no support in the employee's age, occupation, or local job market
Failing to document the job search, which leaves the mitigation question to the opposing economist
How does the economist decide how long front pay should run?
From the employee's age, occupation, tenure, and the time comparable work reasonably takes to find, supported by the job search record and by data on how long similar workers stay in a position. The economist states the period and the reason for it, and can show the number under alternative periods so the fact finder sees what the assumption moves.
What makes a wrongful termination loss larger than the wage gap?
The benefit accruals that ended with the employment: defined benefit pension credits, retiree health eligibility, employer retirement contributions, and unvested equity. For a long-tenured employee those items can rival or exceed the wage loss, and they are valued from the plan documents rather than the pay stubs. Counsel considering an economist should gather the plan documents early because the employee usually does not hold them.
Can the economist address mitigation at this stage?
The economist can describe what the mitigation record needs to contain and can show how replacement earnings at different levels would change the loss. Whether the employee's search was reasonable is a question for the fact finder. Documenting the search from the start keeps the question from being answered by the opposing side's assumptions.
References
U.S. Bureau of Labor Statistics. (n.d.). Current Population Survey (CPS). U.S. Department of Labor. bls.gov
U.S. Bureau of Labor Statistics. (n.d.). Employer Costs for Employee Compensation (ECEC). U.S. Department of Labor. bls.gov
U.S. Department of the Treasury. (n.d.). Daily Treasury par yield curve rates. home.treasury.gov