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These chapters are loaded with practical forms, procedures, tables, and tactics from a veteran economist who has consulted on thousands of cases. The explanations are thorough, the math is straightforward, and the advice is detailed and valuable.

Whether or not your case justifies retaining an expert, these chapters can guide you start-to-finish through damage assessment and proof:

Determine past and future income losses.
Compute the value of fringe benefits.
Adjust for personal consumption.
Adjust for income taxes.
Measure the replacement value of household services.
Compute life and worklife expectancy.
Convert medical and rehabilitation reports into dollar values.
Convert future losses to their present value.
Put everything together to calculate loss.
Prepare your case and expert for trial.
Depose and cross-examine the opposing expert.

An excerpt of a representative chapter is provided at the bottom of this page.

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Chapter 1 The Forensic Economist

Chapter 2 Overview of Data Needed by the Economist

Chapter 3 Past and Future Earnings

Chapter 4 Determining the Value of Employer Paid Benefits

Chapter 5 Adjusting for Personal Consumption and Support Factors

Chapter 6 The Value of Household Services

Chapter 7 Life and Worklife Expectancy

Chapter 8 How to Include Income Tax in the Evaluation

Chapter 9 Using Reports of Medical and Rehabilitation Experts

Chapter 10 Legal Opinions

Chapter 11 Interest Rates and Present Value

Chapter 12 A Sampling of Methods to Calculate Losses

Chapter 13 Putting It All Together

Chapter 14 Tactics and Strategy

Chapter 15 Hedonic Damages—The Value of Human Life

Chapter 16 Special Unrelated Topics

Chapter 17 Structured Settlements

Here are the first 6 pages of a 16-page chapter:

Chapter 4

Determining the Value of Employer Paid Benefits

§400 In General

§410 Where to Find Benefit Information

§420 Specific Benefits

§430 Summarizing Lost Benefits

§440 How to Determine the Loss

§400 In General

§410 Where to Find Benefit Information

§411 Information From the Employee Client

§412 Information From the Employer

§413 Information From Unions

§414 Information From the Department of Labor

Table 19: Employer Costs

Table 20: Employment Wages and Benefits Percent Changes

§415 Increases in Benefits

Table 21: Growth Rate of Employer Paid Benefits

§416 Social Security Credits and Ages

§420 Specific Benefits

§421 Paid Vacations and Sick Leave Pay

§422 Life Insurance

§423 Health Insurance

§423.1 Health Care Reform

§423.2 How to Obtain Health Insurance Premium Quotes

Table 22A: Health Insurance Premium Quotes

§424 Pensions and Retirement Plans

§425 The Company Car

§426 Expense Accounts and Other Miscellaneous Perks

§427 Estimating the Loss of Social Security Retirement Benefits

Table 22B: Estimates of Social Security Losses for Married Workers

§430 Summarizing Lost Benefits

List: Summary of Benefits

§440 How to Determine the Loss

§400 In General

Loss of employer paid fringe benefits often represents a significant loss to a worker and his family. The economist must determine two things: discover what benefits were lost, and place a value on them. The former is far easier than the latter, and you should make every effort to provide the economist with as much information as you can regarding benefits. When specific information cannot be obtained, the economist will use the best information available to make a conservative estimate of the loss.

§410 Where to Find Benefit Information

Start your search by asking your client to make a list of all benefits provided in his former job. Next, attempt to obtain data directly from the employer. If your client was a union member, get a copy of the union contract. If you can’t obtain information from these sources, tell the expert and he will then know that he must rely on national studies and statistical samples and assume the injured party received some average amount of benefits. Such studies are available and, while less desirable than specific job related data, they are acceptable in court and do provide a better estimate than a guess. Let’s consider separately each of these sources.

§411 Information From the Employee/Client

Most workers can give you a list of the fringe benefits provided through their job, but many do not keep specific benefit descriptions normally provided to newly hired employees. Sometimes payroll stubs provide a clue, especially when both the employer and the employee share in the cost of the benefit. W-2 forms will indicate whether the job was covered under social security, to which the employer makes regular contributions that do not show up on the worker’s pay stub. Recognize that while the employee can probably give a complete list of benefits, he seldom has any idea of what the company is paying for them. Even so, a list of benefits provided by your client removes some of the assumptions the economist would otherwise have to make.

§412 Information From the Employer

Many employers will readily provide you with a complete list of benefits and the cost to the company of each. Unfortunately, this is not true of all employers, particularly when the employer is also a defendant in the case. You may be required to use a subpoena to get specific data, and even then the data may be aggregated in such a way that specific benefit costs cannot be identified. The company personnel or payroll officers may tell you there is no way to isolate the amount paid for a particular worker; however, you may still be able to get some useful information by trying the back door. If, for example, you are told that each month the company sends a check to its health insurance carrier to pay for the coverage for the entire workforce, find out the total monthly payment and how many persons on the payroll are covered by the plan. Granted, the cost to cover a single worker is less that the cost to cover a married worker and his family, but when the company will only provide aggregate figures, it is the best information you have and your economist can use it.

§413 Information From Unions

Most union contracts are for a 3-year period and each time a new contract is negotiated, a copy is given to each union member. A copy of the contract currently in force, as well as past contracts, should be obtained and forwarded to the economist. When the member does not have a copy, go directly to the union. You will usually find them very willing to do anything they can to help their members. An efficient economist who is active in a particular geographical area will cultivate a working relationship with union representatives and maintain a library of contracts of the larger unions in the area. You will find that most union contracts are very specific in regard to fringe benefits, providing both a listing of benefits and a dollar value for each. Table 10 in Chapter 3 was reproduced from a California carpenter’s union contract. In there, you can see that the actual dollar value is given for each hour worked by the member. For instance, for each hour worked, $2.455 is paid by the employer to the member’s health and welfare plan. This detail makes it easier to calculate the value of the loss, and also provides a solid foundation for an estimate of the loss that is free of assumptions.

§414 Information From the Department of Labor

The Department of Labor regularly published their estimates of the value of employer paid benefits in the “Monthly Labor Review,” but like so much of their data, these tables are now found on the Internet. Table 19 is the government survey results from the most recent survey regarding the value of benefits.

Take care when using these tables as they can easily be misread. To illustrate, let’s assume that total compensation is $24.59. Wages and salaries are $17.56 and total benefits are $7.03. Total compensation is just a sum of wages and salaries plus benefits. The adjacent percentages are interpreted the same way. The 28.6% assigned to benefits, however, is not a percent of wages and salaries, but a percent of the total compensation figure. To determine what benefits are as a percentage of wages, it is necessary to divide wages and salaries by the value of benefits and convert the answer to a percent by multiplying by 100. For example:

(Total benefits / wages) x 100 = Percent of pay

($7.03 / $17.56) x 100 = 40.03% of pay

This 40.03% is considerably higher than the 28.6% as reported by BLS.

To simplify this table for use by you and your economist so that you do not have to make the calculations, a third column has been added under each of the eight categories and is titled “Benefits as Percent of Wages and Salaries.” In that column, benefits have been calculated as in the example above. The obvious word of caution is that if your economist is using the plaintiff’s wages or salary and the percentages from the column titled “Benefits as Percent of Total Compensation” published by BLS, he is understating the value of the benefits.

This is not necessarily the percentage your economist will use in his analysis as it is very unlikely that any worker will receive each and every one of the benefits listed in this table. He will select only those applicable, and make the comparable adjustment as shown above to personalize the evaluation to the specific plaintiff.

Table 19: Employer Costs

Please see the Tables folder on the CD-ROM for this image.

Table 20: Employment Wages and Benefits Percent Changes

Please see the Tables folder on the CD-ROM for this image.

§415 Increases in Benefits

The Bureau of Labor Statistics reports increases in wages and salaries, and to capture the full cost of what employers pay workers, they also report increases in benefits. Table 21 illustrates the rates at which employer paid benefits have been increasing over time. Each percent increase shown in that table represents the increase from the same period one year earlier. It is easy to see that, like wages and salaries, benefits also increase yearly. It is not that the type of benefits increases, but that the benefits offered do go up in cost to the employer.

Table 21: Growth Rate of Employer Paid Benefits

Please see the Tables folder on the CD-ROM for this image.

When the economist does elect to include the employer’s contribution to social security, there remains the question of the correct percentage of pay to use. Perhaps the simple answer is to include only the portion that is designated for the retirement benefit. Recall that Social Security is the short name for Old Age Survivors, Disability, and Health Insurance (OASDI). There are three components to which the employer’s contribution is earmarked. There is Health Insurance (HI) better known as Medicare, Disability Insurance (DI) and Old Age Survivors Insurance (OASI). How these make up the 7.65% employer’s contribution can be shown as follows.

Total Rate 7.65% OASDHI

Less Health Insurance –1.45% HI

_______________

Remaining for Retirement and Disability 6.20% OASDI

Less Disability Insurance –0.90% DI

_______________

To Retirement Benefits 5.30% OASI

These percentages were taken from the annual Report of the Actuaries of the Social Security Administration. From this breakdown, it would seem that when the economist is measuring only the loss of retirement benefits the correct figure to use is 5.3%.

§416 Social Security Credits and Ages

There will be cases where you will want your economist to consider social security benefits in his or her loss evaluation. What those benefits may be depends to a great degree on the earnings history of the plaintiff. And there are differences that sometimes result from not understanding the terminology used by Social Security in calculating benefits. For instance, there is a difference in “fully insured” and in “permanently insured.” Also, the rules have changed regarding retirement ages and age 65 is no longer the magic number. To assist you and your economist, the items below have been reproduced without change from the most recent Social Security information posted on their web site. Each section is self-explanatory, but each needs to be understood by you if you want to have an effective direct or cross-examination.

Social Security
Delayed Retirement Credits

The Social Security Amendments of 1983 (H.R. 1900, Public Law 98-21) contained two provisions which may have an impact on when an individual decides to retire. The two provisions are an increase in the retirement age that can first affect individuals retiring in 2000 and an increase in the delayed retirement credit for those who work beyond full retirement age.

Delayed Retirement Credits

Social Security benefits are increased (by a certain percentage depending on a person’s date of birth) if retirement is delayed beyond full retirement age.
The benefit increase stops when a person reaches age 70, even if they continue to delay taking benefits.

Increase for Delayed Retirement

Increase for Delayed Retirement
Year of Birth	Yearly Rate of Increase	Monthly Rate of Increase
1930	4.50%	3/8 of 1%
1931-1932	5.00%	5/12 of 1%
1933-1934	5.50%	11/24 of 1%
1935-1936	6.00%	1/2 of 1%
1937-1938	6.50%	13/24 of 1%
1939-1940	7.00%	7/12 of 1%
1941-1942	7.50%	5/8 of 1%
1943 or later	8.00%	2/3 of 1%

History of the OASDI contribution and benefit base
Year	Amount	Year	Amount	Year	Amount
1937-50	$3,000	1981	$29,700	1996	$62,700
1951-54	3,600	1982	32,400	1997	65,400
1955-58	4,200	1983	35,700	1998	68,400
1959-65	4,800	1984	37,800	1999	72,600
1966-67	6,600	1985	39,600	2000	76,200
1968-71	7,800	1986	42,000	2001	80,400
1972	9,000	1987	43,800	2002	84,900
1973	10,800	1988	45,000	2003	87,000
1974	13,200	1989	48,000	2004	87,900
1975	14,100	1990	51,300	2005	90,000
1976	15,300	1991	53,400	2006	94,200
1977	16,500	1992	55,500	2007	97,500
1978	17,700	1993	57,600	2008	102,300
1979	22,900	1994	60,600	2009	106,800
1980	25,900	1995	61,200	2010	111,600
Note: Amounts for 1937-74 and for 1979-81 were set by statute; all other amounts were determined under automatic adjustment provisions of the Social Security Act. OASDI Trustees Actuarial Report.

Table 1–Normal Retirement Age
Year of birth	Normal retirement age
1937 and prior	65
1938	65 and 2 months
1939	65 and 4 months
1940	65 and 6 months
1941	65 and 8 months
1942	65 and 10 months
1943-54	66
1955	66 and 2 months
1956	66 and 4 months
1957	66 and 6 months
1958	66 and 8 months
1959	66 and 10 months
1960 and later	67
Note: Persons born on January 1 of any year should refer to the normal retirement age for the previous year.

Insured Status Requirements

Updated Jan. 16, 2003

Introduction

You must be insured under the Social Security program before retirement, survivors, or disability benefits can be paid to you or your family. We consider the number of Social Security credits you earned to determine if you are insured. You earn such credits—also called “quarters of coverage”—for a certain amount of work covered under Social Security, but no more than 4 credits per year. Generally you need to be fully insured to receive Social Security benefits, but other requirements may also apply.

Fully Insured

To be fully insured, you need at least one credit for each calendar year after you turned 21 and the earliest of the following:
1. the year before you attain age 62,
2. the year before you die, or
3. the year you become disabled.
Exceptions: If you were born before 1930, you need at least one credit for each year after 1950. Other exceptions may apply.
The minimum number of credits needed is 6. The maximum number needed is 40. Any year (all or part of a year) that was included in a period of disability is not included in determining the number of credits you need.

Permanently Insured

You are permanently insured if you are fully insured and you will not lose your fully-insured status when you stop working under covered employment.

§420 Specific Benefits

§421 Paid Vacations and Sick Leave Pay

Make sure that there is no double counting of fringe benefits, something that can easily happen when dealing with vacation or sick leave pay. Both of these types of pay are normally included in gross wages reported on the worker’s W-2 form, so if the economist is using the W-2 to establish annual pay, and also adding a percentage of pay to cover vacation and sick leave, he is counting the same pay twice: once in gross wages and once again by adding a percentage to gross wages. To avoid this problem, discover whether vacation pay is included in the worker’s regular paycheck, as is sometimes done by unions, and whether it is included in the W-2 form.

Another possible source of double counting occurs when the economist is not only calculating a loss of wages but also a loss of pension benefits. Many pension plans credit unused vacation time and sick leave as service credit toward retirement pay. For a worker with many years of service who has been accumulating unused vacation and sick days, this can easily add a full year or more to service credit. Thus, if the economist claims a loss of these items as fringe benefits for the remainder of the employee’s worklife, and then uses the accumulated days in determining a loss of pension benefits, he is again double counting. Make the claim as a loss of fringe benefits or a reduction in pension benefits, but not both.

§422 Life Insurance

When an injured worker loses his job, he also loses his fringe benefits. If life insurance was provided by the employer, it is a loss and should be included in the estimate. Note, however, it is not the face value of the policy that should be included, but the cost to provide the coverage. Most economists will take the loss to be the monthly premium paid by the employer as a percent of monthly wages. This certainly is conservative because the cost to the employer is based on a group insurance plan, and that is virtually always less than the cost for the same coverage under an individual plan. Further, the greater the degree of injury, and the greater the probability that the injury has shortened the worker’s life expectancy, the greater the cost for an individual plan. If you start early, you can get your client to apply for an individual life insurance policy offering the same coverage as his previous group plan. The quote can then be used as the basis for a loss claim. A strong argument can be made that the true loss is not the contribution by the employer, but the protection provided to the worker’s survivors, and it is the protection that must be replaced at the actual cost of that replacement. Again, since this replacement cost will undoubtedly be higher than the employer contributions to a group plan, the use of the employer contribution as the basis of the loss is certainly conservative.

If the worker is deceased, the situation changes greatly. The worker, at the time of his death, was covered under

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