Back Pay and Front Pay Calculations in Employment Termination Cases: Accounting for Re-Employment and Mitigation Efforts

Abstract

Most plaintiffs in employment termination cases will ultimately become re-employed. However, for some plaintiffs the termination of their employment produces significant economic damage to their earnings, retirement pension, and fringe benefits. For other plaintiffs, an employment termination causes little to no measurable economic harm. The individual plaintiff's efforts and ability to regain comparable replacement employment is often the key difference between the two types of plaintiffs.The goal of this article is to provide a conceptual and practical discussion of the factors that comprise a standard economic damage model in an employment termination case. In this paper, we discuss the economic factors and assumptions that comprise an economic damages model in an employment termination case. We also provide a discussion of the valuation of employee fringe benefits and employee stock option valuations. Background on the concept of discounting and check lists that can be used to gather information in an employment cases are also provided in this paper.