Financial Experts Play a Key Role in Employment Discrimination Cases

Employment discrimination claims continue to be a major concern for employers today. These claims may be based on race, color, national origin, sex (including pregnancy, gender identity and sexual orientation), religion, disability or genetic information. Financial experts can not only help the parties calculate and evaluate damages, but also play a key role in proving or disproving discrimination.

Possible Remedies

The remedies available for employment discrimination depend on the relevant statute under which the claim is brought. However, they generally include:

• Back pay,
• Promotion,
• Reinstatement,
• Front pay,
• Reasonable accommodation, and/or
• Other relief designed to make the claimant “whole” again.

Financial experts are often used to determine front-pay damages. This estimates a victim’s lost compensation and benefits from the date of the claim through a future date when the victim will reach, or is expected to reach, the compensation level that would have been achieved absent the wrongful termination or other discriminatory act. Damages are based on various factors, such as age, race, education, wages, tenure and industry.

Other Recoverable Losses

Additionally, a wronged employee may be eligible for attorneys’ fees, expert witness fees and court costs. In cases involving intentional discrimination, claimants may be entitled to compensatory damages, including actual and future monetary losses, as well as nonpecuniary losses, such as emotional distress. Punitive damages may also be available if the claimant demonstrates that the employer acted with malice or reckless indifference to federally protected rights.

Under 42 U.S.C. Section 1981a(b), total compensatory and punitive damages are capped in cases of intentional discrimination. The cap is based on the number of employees the employer had in each of 20 or more calendar weeks in the current or preceding calendar year. It tops out at $300,000 for employers with more than 500 employees.

In cases involving either intentional age- or sex-based wage discrimination, victims can’t recover either compensatory or punitive damages. But they may be entitled to liquidated damages that may be equal to the amount of back pay awarded the victim.

Adverse Treatment vs. Disparate Impact

In general, there are two categories of discrimination. First, adverse treatment happens when members of a protected class are intentionally treated differently than other employees. The classic example is refusing to hire workers of color because the employer feels that they’re less capable or that customers won’t want to deal with them.

The second category is disparate impact. This term refers to unintentional discrimination that can result when an ostensibly neutral employment policy or practice disproportionately affects members of a protected group.

Statistical analysis can be particularly helpful in disparate impact cases. For instance, suppose an employer screens applicants using a test that disproportionately excludes older workers. A group of workers subsequently sues for age discrimination based on the test’s disparate impact. In response, the employer hires an expert who conducts regression analyses to study the correlations between various factors and hiring rates. Despite finding a positive correlation between age and failing the employment test, the expert finds a stronger correlation between test failure and lack of computer skills. The employer uses this information to show that the test had a legitimate, nondiscriminatory business purpose.

Involve Experts Early

Ideally, employers should consult experts before they adopt a particular employment practice or lay off workers. Being proactive helps evaluate an employer’s exposure to employment discrimination liability. In the event of litigation, however, an expert can provide critical analysis and testimony to help the parties objectively evaluate the facts of a case.