The Mixed Motive Instruction in Employment Discrimination Cases: What Employers Need to Know

In litigation regarding employment discrimination, the burden of establishing proof has continued to shift. As a result, employers and legal counsel need to be aware of the status of what they and human resources professionals should consider when an employee alleges that the employer has violated federal discrimination statutes. The original standard of proof required the plaintiff to establish that the employer discriminated against that person. Many cases still involve that approach, giving the plaintiff the burden of creating prima facie case. However, another line of rulings by the U.S. Supreme Court added an alternative method for addressing discrimination litigation, known as the mixed motive approach. The two-prong mixed motive case requires the employee to demonstrate that a protected characteristic (e.g., race, sex, national origin) was a substantial factor in an employer\u27s adverse action. If that is established, the employer then has the burden of proving that the decision would have been made in any event, regardless of the employee\u27s protected characteristic. As a practical matter, employers facing litigation of this type must consider whether and how to defend such a case. Even a win can be expensive, because in cases where there is a divided decision, the employer must pay the plaintiff\u27s attorney fees and court costs, as well as its own. Moreover, since the Civil Rights Act of 1991 places discrimination cases in front of a jury, a divided decision is seemingly more likely. Although that presumably gives both sides a win, it still means a large expense for the employer

Short-Term Liquidity Measures for Restaurant Firms: Static Measures Don\u27t Tell the Full Story

Although most analysts apply static measures such as the current ratio or the quick ratio to assess a firm\u27s short-term liquidity, a separate calculation of dynamic integrative measures can tell a completely different story about a firm\u27s ability to meet its short-term obligations. One important difference between the two types of measures is that the static measures assume that a firm will be liquidated, while the integrative measures evaluate the liquidity of the firm as a going concern. Analyzing a sample of restaurant and manufacturing firms from 1994 through 2003, the static measures of liquidity imply that restaurant companies are illiquid, while manufacturing companies are liquid. However, when the same companies are evaluated under an integrative framework, restaurant firms were shown to be the more liquid ones, based on their financial and operating liquidity. Compared to restaurants, manufacturing firms exhibit a certain amount of operating illiquidity due to the length of their cash-conversion cycle (that is, the time it takes to generate revenue from the expense of adding and processing inventory). The analysis suggests that financial analysts, creditors, and managers should evaluate both dynamic liquidity measures and static measures in assessing short-term liquidity, since each measure provides different information about a company\u27s ability to cover its obligations. Moreover, when evaluating a company\u27s liquidity over time, one must pay careful attention to the sources of any changes in a company\u27s liquidity position. The finding that restaurants, particularly owner-operator firms, have high operating liquidity should be an argument for favorable short-term financing terms, even though static ratios make restaurants seem like poor risks. An accurate evaluation of short-term liquidity may improve restaurants\u27 cost of short-term financing, overall financing costs, and required returns from equity investors

Low-price Guarantees: How Hotel Companies Can Get It Right

With the growth of the internet, the increase in the volume of online bookings has altered and multiplied the hotel industry\u27s distribution channels. While this growth has driven up the profits of online travel agencies, hotel operators are experiencing a loss of control over the pricing of rooms and a potential transfer of pricing authority to third-party internet-based companies. The popularity of such services stems from consumers\u27 desire to obtain the lowest rate within their desired market segment. One possible cure applied by many hotel chains is to offer a best-rate guarantee on their own web sites. A calculation of the option value of such guarantees shows, however, that current rate guarantees have little value to consumers. Instead, an application of option-pricing approaches demonstrates how a hotel company can structure a best-rate guarantee that would provide value to consumers by offering the guest the option of purchasing a price guarantee. Such an option would give the guest the lowest price posted on a specified set of web sites, up to the time the guest arrives at the hotel. The pricing of this option would be based on a well-established exotic-option pricing formula. A demonstration of how to price this best-rate guarantee shows that its value (and its price) diminishes as the arrival date approaches, so consumers should be willing to pay for the option, because the price is set according to the likelihood that prices will change. Using this approach hotel companies should be able to eliminate the incentive for consumers to engage in search-and-switch behavior, reestablish the price integrity of their product, and simultaneously create a revenue stream from the sale of the best-rate-guarantee options to their customers