NEW YORK, NY--(Marketwire - July 19, 2010) - Organizations faced with complex employment decisions such as hiring, firing, promotions or selections for training, may be at risk of making decisions that result in unintended adverse effect on certain employees, also known as "disparate impact." Certain employees such as women, minorities, older workers (employees over the age of 40) and people with disabilities, among others, fall into categories known as "protected class groups."
Disparities among protected class groups can potentially lead to claims of disparate impact or disparate treatment, even under the circumstances of very legitimate business decisions.
Organizations could prevent claims of disparate impact -- and potentially lengthy and expensive lawsuits -- by using statistical tools -- the same tools used by the courts -- before they make decisions affecting employees, such as hiring, reductions in force and even apparently justifiable individual terminations, job assignment, and the like.
That's the advice of Josefina Tranfa-Abboud, Ph.D., a director in the Litigation and Corporate Financial Advisory Services Group of leading New York accounting firm Marks Paneth & Shron (MP&S). Dr. Tranfa-Abboud, an economic and financial analyst and expert witness, consults frequently for companies, governments, organizations and employment attorneys, on the use of statistical analysis to test whether employment decisions are fair.
"Often, organizations retain an expert to analyze the impact on protected class groups only after a lawsuit is brought and when they are trying to argue against claims of earnings and benefits damages," Dr. Tranfa-Abboud says. "It would be better for them -- less expensive and less damaging -- if they applied the same tests right at the beginning, when they are considering personnel moves but haven't yet made them."
Dr. Tranfa-Abboud can explain:
- How to test for disparities: Statistical analysis shows whether a "class" of employees (such as women, minorities or the disabled) was affected by a personnel decision, out of proportion to their numbers in the company. "If 80 percent of the workforce is made up of women, and 80 percent of laid-off employees are women, then there's probably no statistical evidence of disparity. But if 50 percent of the workforce is made up of women and 80 percent of laid-off employees are women, then the organization is open to claims of disparity and possibly discrimination," Dr. Tranfa-Abboud says. Courts use these tests conducted by labor and employment experts to determine whether there is a statistical evidence of disparity.
- Why disparities aren't always obvious: "This can be particularly the case when the organization is small, or if employment decisions may affect only employees in a certain department or division, or employees with certain job functions that happen to employ small groups of individuals."
- Why hiring and firing aren't the only risky decisions: Hiring and firing decisions (including reductions in force, also known as RIF's) get attention, but claims of disparities may arise whenever employees perceive that a decision affects them differently. "For instance, if you decide to send some employees to training, and the group isn't representative of all your employees, those who were underrepresented can say that they were denied skills that later could have gotten them promotions and more pay," Dr. Tranfa-Abboud explains. "Any personnel decision, if it affects a group disproportionately, puts a company at risk for discrimination claims."
- Why evidences of disparity may not be a one-time event; decisions made over years can show a pattern over time that even the organization may not have noticed: "Often, organizations focus on single dramatic events, such as a mass layoff," Dr. Tranfa-Abboud says. "But small-scale decisions made over time, such as sending only younger employees for further training every year, may result in potential liability."
- Why companies and organizations can -- and should -- use the same statistical analysis at the beginning of the decision-making process, or conduct periodic self-imposed audits to make sure they're being fair, and avoid the potential of costly lawsuits: "Companies and their attorneys often retain the services of labor and employment consultants to test for disparities after a claim has been filed, and when they are arguing against economic damages," Dr. Tranfa-Abboud says. "It would be less costly, in financial terms and potentially in terms of damage to their reputations, if an expert is retained ahead of a series of decisions to hire, fire, promote, demote, or train a group of individuals. A statistical test can identify disparities before it happens and help the organization make sure it is being conducted fairly, and that the decisions being made are fully justified by business reasons. It's like installing an alarm system before your house is burglarized instead of after. A small amount of effort and expense can prevent big problems later on."
"Applying objective tests for protected group disparities at the outset or as a self-audit is not just a way of preventing lawsuits -- more importantly, it helps ensure that the organization is doing the right thing for all its employees," Dr. Tranfa-Abboud says.
For more information, to schedule an interview or request a bylined article, contact Itay Engelman of Sommerfield communications at (212) 255-8386 or itay@sommerfield.com.
About Josephina Tranfa-Abboud, Ph.D.
Josefina V. Tranfa-Abboud Ph.D. is a Director in the Litigation and Corporate Financial Advisory Services Group at Marks Paneth & Shron LLP. Dr. Tranfa-Abboud has extensive experience in the economic analysis of labor and employment disputes, as well as commercial disputes related to claims of breach of contract, and business interruption, Dr. Tranfa-Abboud provides research, statistical analysis, damages analysis, and expert witnessing services for both plaintiffs and defendants.
Before joining Marks Paneth & Shron, she was a senior economist for an economic consulting services firm in New York City and was responsible for consulting services and analysis in the areas of personal injury, wrongful death, mass torts and commercial revenue forecasting. She also served as a research economist for ERS Group, a nationally recognized labor and employment consulting firm, in Washington, DC and Tallahassee, Florida, and has been an advisor to the Chief of the Central Budget Office of the Venezuelan government.
Dr. Tranfa-Abboud holds a Ph.D. in economics from Florida State University and a BS in Economics from Universidad Central de Venezuela. She taught quantitative methods and econometrics at the doctoral level at Rutgers University. She has also taught at Florida State University and at the Universidad Central de Venezuela. A member of both the American Economic Association and the National Association of Forensic Economics, Dr. Tranfa-Abboud has been published in the Journal of Forensic Economics.
About Marks Paneth & Shron
Marks Paneth & Shron LLP is an accounting firm with nearly 475 people, of whom 64 are partners and principals. The firm provides businesses with a full range of auditing, accounting, tax, bankruptcy and restructuring services as well as litigation and corporate financial advisory services to domestic and international clients. The firm also specializes in providing tax advisory and consulting for high-net-worth individuals and their families, as well as a wide range of services for international, real estate, media, entertainment, nonprofit, professional and financial services and energy clients.
The firm's subsidiary, Tailored Technologies, LLC, provides information technology consulting services. In addition, its membership in JHI, the leading international association for independent business advisers, financial consulting and accounting firms, facilitates service delivery to clients throughout the United States and around the world.
Marks Paneth & Shron LLP, whose origins date back to 1907, is the 32nd largest accounting firm in the U.S., and the 13th largest in the New York area. Its headquarters are in Manhattan. Additional offices are in Westchester, Long Island and the Cayman Islands. For more information, please visit www.markspaneth.com.
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itay@sommerfield.com