“Loss of income” is a term used in personal injury cases that refers to a loss of wages or salary that a person suffers as a result of the injury that is the basis of their personal injury claim. A person may lose income because their injury renders them unable to work for a period of time or because they must miss work to seek medical treatment, rehabilitation, recovery from their injury or surgery, and recovery from surgery.
Loss of income may also be referred to as “lost wages,” “loss of earnings,” or “lost earnings.”
For example, a person may be unable to work for one week as a result of a car accident. In this case, they would sustain lost income for that week in the form of pay they do not receive. Loss of income may also cover:
- Wages or salary from work;
- Commissions from sales;
- Bonuses;
- Other benefits that they may lose because of not working.
For a plaintiff to recover damages to compensate them for the loss of income, the loss cannot be attributed to a pre-existing medical condition or any other physical issues that were not caused by the defendant’s actions. The income must have been lost because of injuries directly caused by the defendant’s negligence or intentional civil wrong.
If the plaintiff sues for loss of income, they are required to prove the amount of their lost income with reasonable certainty.
The plaintiff might successfully prove that the defendant is responsible for the plaintiff’s injuries and their resulting loss of income. If the plaintiff is successful, the defendant would be required to compensate the plaintiff for all of their economic losses, including their lost income.
Proving the plaintiff’s loss of income would involve reviewing the plaintiff’s record of attendance and correlating that to their medical treatment and physical recovery.
How Is Loss of Income Calculated?
If the plaintiff sues for loss of income, both past and future, they are required to prove the amount of their lost income with reasonable certainty.
The plaintiff might successfully prove that the defendant is responsible for the plaintiff’s injuries and their resulting loss of income. If so, the defendant would be required to compensate the plaintiff for all of their economic losses, including their lost income.
Proving future lost wages based on a plaintiff’s current actual employment should be relatively straightforward. It would involve making a reliable estimate of the amount of time at work the person can be expected to miss in the future and the effect of that on their earnings.
When calculating past loss of income, the court would rely on evidence provided by the plaintiff as to the amount of time they were unable to work because they had to recover from their injuries, visit doctors, or receive necessary treatment. This would probably be accurately reflected in the plaintiff’s employment record. Because of this, determining past loss of income is a relatively straightforward process.
Proving past or future loss of income, however, may be more complicated if the plaintiff is self-employed or works irregularly. Potential evidence of loss of income could include:
- Tax returns and other IRS filings;
- Business records showing income and profit and loss of a business;
- Documentation of time spent receiving necessary medical treatment and in recovery from injury and treatment for injury.
What Is the Difference Between Loss of Income and Loss of Earning Capacity?
As previously noted, loss of income refers to past and future income that a person would lose because they miss days of work at their current employment due to their injuries. They would lose income because they lost time from work for recovery and medical treatment.
Loss of earning capacity is something different. It refers to the economic loss the person would suffer in the future because they can no longer do the same type of work they did before they were injured. They have suffered a permanent incapacity or disability that affects the kind of work they are capable of performing. Any new work they might realistically expect to do would bring the person less income than they were able to produce before they were injured.
In a sense, suing for loss of earning capacity is suing for loss of potential income that the person is not going to earn because of their permanent disability. Calculating a loss of earning capacity involves predicting the plaintiff’s ability to earn a living and how it would be limited.
It is difficult to make this type of determination in an exact way. However, there are economic experts who can make the necessary calculations and testify at trial about the economic effect of a plaintiff’s disability on their future earning potential.
These experts are able to project how future promotions, possible raises, and improvements in talent or skill would have led to an increase in the individual’s income. They are able to make projections about how the plaintiff’s future career would have played out had they not sustained the injury. And, importantly, they can put a dollar value on this loss to the plaintiff.
How Is the Loss of Earning Capacity Calculated?
As noted above, an expert witness would testify about the plaintiff’s earning capacity prior to their injury and then compare it to the reduced earning capacity that the plaintiff has after suffering injury.
The calculation would involve assessing the following information related to the plaintiff:
- The plaintiff’s employment profile, including their:
- Skills;
- Abilities;
- Education and training;
- Past work experience;
- Hiring an expert medical professional who can testify about the extent of the plaintiff’s injuries and any continuing disability and how these would affect their ability to earn a living;
- Hiring an expert economist who can testify about how the plaintiff’s ability to earn a living would be permanently affected by their continuing disability and result in a reduced ability to earn the same wage or salary that they earned before they were injured.
An economist would use current market values and wage rates in order to determine the amount of income the plaintiff could be expected to lose in the future because they would not be able to do the same kind of work that they have done in the past. The plaintiff would have to perform a different type of work that would bring them a reduced income.
The exact amount of an individual’s lost earning capacity may vary based on region. Different areas have different standards of living and wage rates.
Generally speaking, damages for loss of earning capacity would be based on the difference in the income that a plaintiff would have been able to earn before they were injured. It would also be based on what their income would be now that their earning capacity has been affected negatively by their injury.
Do I Need the Help of a Lawyer for My Lost Wages or Loss of Earning Capacity Claims?
Finding the expert witnesses who are needed to succeed with claims for lost wages and loss of earning capacity requires the help of a personal injury lawyer. LegalMatch.com can connect you to a lawyer who is experienced in dealing with experts in cases of this kind. Your lawyer will know how to make use of the expert in negotiations and at trial. Calculating future loss of earnings in a personal injury case is complex and may require the assistance of a lawyer.
Your attorney can review your case, determine if you are eligible for a loss of income or lost earning capacity claim, and represent you during any court proceedings. Your attorney will guide you in gathering the necessary evidence to prove your claim. Having an attorney on your side may provide you with income for the rest of your working years.
