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Lost Wages and Earning Capacity in Personal Injury Cases

Lost Wages and Earning Capacity in Personal Injury Cases

In a successful personal injury case, the injured party is awarded damages to compensate for his or her losses due to the injury. Some common types of damages in personal injury cases include reimbursement for medical bills, payment for rehabilitative services, compensation for pain and suffering, and lost earnings.

Lost Wages v. Earning Capacity

There are two different types of lost earnings that may be considered in a personal injury case.

Lost Wages in Personal Injury Cases

The first and most straightforward is wages lost because the personal injury victim is unable to go to work while recuperating from the injuries. Putting a dollar value on this type of lost wages is comparatively simple. The negotiating parties, judge, or jury will know what the injured party’s usual rate of pay was, how many hours he or she typically worked before the injury, and how many days or weeks were missed because of the injury.

Lost Earning Capacity after an Injury

The more complicated calculation is loss of earning capacity. Loss of earning capacity comes into play when the injury victim has been hurt so badly that he or she will not be able to work again, or when the injury will necessitate a career change or long-term reduction in work hours.

Establishing lost earning capacity is more complicated than establishing lost wages, and more often a point of contention. Lost earning capacity claims are typically most difficult and most hotly contested when the injured person was in the early stages of his or her career. In part, these types of claims are often disputed simply because the insurance company does not want to pay for significant lost earnings across a career that might have spanned three or four additional decades. A young professional unable to return to his or her chosen career could potentially claim millions of dollars in lost earning capacity.

Partly, though, this type of claim is hotly contested because it is difficult to determine the trajectory a person’s career and earnings would have followed had the injury not interrupted. People see different degrees of success across their careers. Career changes are quite common among professionals today. And, with the changing economy and rapidly developing technology, it is more difficult than ever to project how a person’s skills and current experience might translate to income in the future.

Measuring Lost Earning Capacity

Some factors commonly considered in assessing lost earning capacity include:

  • The age of the injured party
  • Life expectancy
  • The number of anticipated remaining working years
  • Earnings prior to the injury
  • Opportunities for promotion and growth
  • Physical or mental limitations impacting the ability to work
  • Impact of the injury on stamina
  • Remaining earning capacity / opportunities for alternative earnings

Typically, a personal injury attorney representing a client who has lost earning capacity claims will retain one or more expert witnesses to establish lost earning capacity. These experts may include:

  • Medical experts to establish physical and mental limitations resulting from the injury
  • Vocational or industry experts to explain how those limitations will impact job performance and opportunity
  • Economic experts to help determine the likely trajectory the injured person’s earnings would have followed if he or she had not suffered the injury

If the injured person was self-employed or owned and operated a business, the analysis may be even more complex.

The Importance of Working with an Experienced Personal Injury Attorney

When a personal injury claim includes loss of earning capacity, it is especially important to work with an experienced personal injury attorney. The right attorney for a personal injury case involving lost earning capacity will understand the issues associated with projected loss income claims and know how to identify and work with medical and economic experts to build a strong foundation for the claim.

If you have suffered an injury that will limit your future earning capacity, prevent you from working in the future, or force a career change, speak with an experienced personal injury attorney as soon as possible.  Attorneys without significant personal injury experience often lack the knowledge and resources to build a compelling support for a lost earning capacity claim.

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