Economic Damages Analyses

Economic Damages Analyses

Economic damages analyses are conducted in matters where adverse actions lead to a loss of earnings and/or monetary or non-monetary losses; in litigation, plaintiffs make claims for economic compensatory damages.  These compensatory damages, or economic losses, are measured by economic damages experts after comparing the earnings/other value forgone as a result of the adverse incident, minus a legally required measure of alternate earnings/other lost value following mitigation of the losses (if mitigation is possible).

Economic damages can arise from employment and non-employment incidents, and often involve individual plaintiff claims, such as wrongful termination, denial of promotion, personal injury, or wrongful death. Damages can also arise in class or collective actions and may result from commercial litigation where individuals or groups of individuals are not the (primary) focus.  In either individual or class action situations, Welch Consulting’s economic damages experts can assist in examining the claims, calculating damages, and providing expert witness services in court if needed.

Practical Solutions Developed by Expert Economists

When encountering damages claims stemming from alleged wrongful termination and denial of promotion injury, layoff, denial of a promotion, or another type of employment setback, it is not enough to simply apply broad-brush assumptions in evaluating economic loss. Welch Consulting economists evaluate the data to determine whether compensation is necessary; we consider the effort and effects in efforts to mitigate losses, and if damages remain after reasonable mitigation is established, we accurately calculate damages.

Individualized Damages

Individual plaintiff cases typically deal with employment decisions affecting only one employee, such as:

  •   Perceived wrongful termination
  •   Failure to promote
  •   Injury following alleged harassment by a superior

We have worked extensively on cases involving alleged discrimination in compensation that do not involve terminations and wrongful death or injury outside of the workplace.

Individualized Damages: Representative Engagements

The Assignment: Estimate Economic Damages in Wrongful Termination Suit

Welch Consulting was retained by attorneys for the plaintiff in a wrongful termination matter involving a national homebuilder. Calculating economic damages for a single plaintiff in this matter required understanding a complex compensation program that included options to purchase new homes at discounted prices, examining and explaining the plaintiff’s mitigation efforts, and valuing alternative reemployment opportunities.

Our Findings

Our expert calculated economic compensatory damages estimates, and offered testimony as an economic damages expert witness, about the plaintiff’s economic losses under a number of reemployment and projected earnings rebound alternatives.

The Assignment: Conduct an Economic Damages Analysis Single-Plaintiff Discrimination Lawsuit

The City of Los Angeles hired Welch Consulting to act as a defense witness in a case involving a minority firefighter claiming he was permanently disabled after being victimized during a station house practical joke involving dog food.

Our Findings

Our economist evaluated the damages report prepared by the expert for the plaintiff, factored the City’s pension and medical benefit alternatives into damages, and presented evidence of alternative re-employment opportunities outside active firefighting.

The Assignment: Estimate Lost Earnings Following On-the-Job Injury

Welch Consulting economists were retained by attorneys representing a California city police department to estimate lost earnings for a gang member who was injured during a police action.

Our Findings

Our economist made use of unique data sources for earnings potential and work-life estimates to generate earnings loss estimates under several training and employment alternatives.

Class Action Damages and Potential Exposure Analyses

Class wage and hour claims of economic damages appear in most litigation associated with alleged employer violations in practices or by company policies, including:

  •   Economic damages allegedly due to misclassification
  •   Missed meal and rest breaks
  •   Unpaid overtime
  •   Work done while “off-the-clock”

Class Action Damages: Representative Engagements

The Assignment: Testify as an Economic Damages Expert Witness in Case of Uncompensated “Donning and Doffing” Time

Welch Consulting was retained by attorneys for a large national food processing company to provide expert testimony regarding economic damages relating to the amount of time spent “donning and doffing” (which can be time putting on and taking off protective equipment and non-equipment gear.)  Employees claimed such time should be considered compensable.

Our Findings

Our economist combined employment history and payroll data with information about where in a processing line an employee was stationed in order to accurately calculate the extent to which an employee’s donning and doffing time was under-compensated.

The Assignment: Analyze and Testify about Proper Classification of Employees

Attorneys representing a national accounting firm retained Welch Consulting to analyze and testify about claims of misclassification of exempt employees.

Our Findings

Our expert combined employment history and payroll information with records tracking hours worked, thereby accurately estimating time worked in excess of forty hours a week.

The Assignment: Calculate Correct Deductions in Employee Bonus Payments

Welch Consulting was retained by attorneys representing a national retailer in wage and hour claims that employee bonus payments reflected improper deductions, and therefore needed to be recalculated. These recalculations had additional implications for which stores were eligible to provide bonuses and for the regular rate of pay at which hourly employees were compensated for overtime.

Our Findings

Our economists estimated the bonus payments after including the additional money, in order to ascertain the difference in bonus that could be compensated. Our expert provided adjusted estimates of exposure based upon these issues as well.

The Assignment: Calculate Company Exposures Due to Uncompensated Travel Time

Attorneys for a national home improvement retailer retained Welch Consulting to calculate exposures relating to travel time. Plaintiffs claimed large amounts of damages due to uncompensated travel time and mileage reimbursements.

Our Findings

Our economists used appointments data for outside sales representatives to develop measures of the actual distance traveled and estimates of associated travel time. Using the actual appointments data, Welch Consulting was able to establish an accurate estimate of how much time was spent traveling by plaintiffs.

The Assignment: Estimate National Retailer’s Exposure for California Meal and Rest Break Violations

Attorneys for a national arts and crafts retailer retained Welch Consulting to estimate exposure for meal and rest break violations in its California stores.

Our Findings

Our economists worked up a “sampling approach” to study a representative sample of stores and time periods such as holiday and non-holiday times of the year in order to estimate damages. These estimates were made under a number of alternatives for waiver-eligible shifts (i.e. shifts 5-6 hours in length) and the grace period minutes (up to 5-10 minutes past their scheduled end of shift).  The alternate exposures provided to Counsel was helpful in setting this matter.

The Assignment: Generate Estimates of Exposure Relating to Misclassification Claims

Attorneys representing a national information management company retained Welch Consulting to assist in generating estimates of exposure relating to misclassification claims.

Our Findings

Our experts combined employment and payroll data in order to accurately estimate rates of pay for relevant groups of employees under different alternatives regarding the liability period, as well as the components of compensation. Our analyses were used to arrive at a satisfactory settlement.

Equal Pay Class Actions

Employment Discrimination/Equal Pay Class Actions

In employment discrimination cases and equal pay class actions, we assist clients in calculating exposure or damages from different types of alleged employer violations, including: 

  •   Discriminatory hiring
  •   Reductions in force
  •   Failure to promote
  •   Failure to pay equal wages
  •   Failure to provide training
  •   Other alleged actions affecting classes of claimants 

We generate statistical measures of potential exposures, including penalties, interest, and liquidated damages, where applicable. In cases where class members are claiming economic damages as groups, Welch Consulting can analyze the scope of individuals claiming damages and estimate exposures by aggregating expected losses at the employee level to reach a class-wide estimate of expected damages.

Employment Discrimination/Equal Pay Class Actions: Representative Engagements

The Assignment: Discover Differences in Layoff Rates

Welch Consulting was hired by counsel for a large national electronics retailer to analyze differences in layoff rates between men and women, whites and minorities, and older and younger workers. The analyses took place at the time of a mass reduction in force, in order to assess the potential risk of future litigation.

Our Findings

We worked with company management to produce real-time estimates of gender, race, and age disparities in potential layoff areas of the company.  We assisted with similar analyses on subsequent layoff decisions that affected different sections of their workforce over a four-year period.

Individual or Collective Arbitrations

In individual or collective arbitrations, we assist clients in calculating economic damages specific to the claims of the individual or group of claimants. Our methodology for computing economic damages compares the foregone earnings prior to the incident against the expected alternate earnings stream afterward, including foregone and alternate measures of other monetized values lost as a result of the incident being arbitrated.

Individual or Collective Arbitrations: Representative Engagements

The Assignment: Generate Economic Damages Estimates for More Than 70 Employees in Common Arbitration Matter

Attorneys representing a national engineering management company retained Welch Consulting to assist in generating estimates of individual damages following arbitration assignments.  This group of employees, claiming wrongful terminations due to racial animus were formerly part of a class action that the court deemed suitable for arbitration.

Our Findings

Our experts conducted individual-level estimates of economic loss based on claimant job market skills and experience, combined with common data from the employer, to estimate economic losses produced at arbitration.

Commercial Litigation

In commercial litigation, Welch has provided damages analyses in disputes over patent infringement, breach of contract, and unfair trade practices.

Commercial Litigation: Representative Engagements

The Assignment: Calculate Net Operating Income of TV Program in Copyright Infringement Suit.  

In a lawsuit over copyright infringement, we calculated the net operating income of a television program that was produced and broadcast by a cable/satellite network.  Since the network’s owners did not track costs or revenues by individual program, we computed income from sales of advertising and sponsorships associated with the program. This analysis relied on the company’s data on commercials, which showed whether the sponsor bought time for the subject program specifically (as opposed to all programs in a generic block of time), as well as the date, time, and revenue for each commercial aired. 

Our Findings

We computed the cost of producing the programs from invoices and contracts.  Our analysis showed that the costs of production exceeded the revenues attributable to the program and that claimed commercial losses were highly inflated.  These findings led to a successful settlement between the commercial litigants.