As with other matters in which financial experts are important contributors to a successful legal team, wrongful termination cases can often hinge on the presentation of a qualified expert. Choosing a forensic accounting professional who can tip the scales in your favor is not always so easy. To aid legal counsel in the selection process, it is useful to look at many factors, including when to hire the expert, components in determining compensation, key areas of contention, and options in experts available.
Hire Early in the Case
The starting point in any wrongful termination dispute is whether there was a damaging event. Forensic accountants rarely, if ever, contribute to establishing this part of the case. However, that does not negate the importance of involving an expert early in the case, in particular:
- A financial expert can estimate the damages to assist the plaintiff and/or their legal counsel in valuing the case.
- Most law firms want the calculations done early in the case to prepare for the possibility of negotiating a settlement without a trial.
Establishing the economic loss sustained by the plaintiff as a result of wrongful or discriminatory action is based on the loss of income and fringe benefits both before and after trial. The calculation involves determining historic (pre-trial) losses as well as projecting future losses. The losses are mitigated by actual income earned in the historical period and in the projected period. In addition to loss of income the damage calculations will include other costs such as medical.
More Than Salary
Compensation is more than simply salary or wages. There are several additional potential benefits associated with employment that must be included in the calculation, if applicable. These include:
- Employer payroll taxes paid for the benefit of the employee such as social security, unemployment insurance, workers compensation insurance, and other state employment taxes
- Insurance (medical, life, disability, etc.) offered by the employer on either a matching or full-pay basis
- Payments for holidays, sick days, vacation, paid time off, family and medical leave pay, etc.
- Retirement benefits including matching 401k contributions, defined benefit plans, stock bonuses/ESOP’s, cash balance plans
- Any other expenses of the employer for the benefit of employees
Obviously, the financial expert must have knowledge of, and experience with, understanding the existing compensation elements and structure of the employer at the time of injury. A miscalculation of any of the above elements can have a material effect on total damages.