Lost Income and Loss of Earning Capacity

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If you’ve been injured due to someone else’s fault, you can receive compensation for lost income as well as for medical costs and pain and suffering. Your recovery for lost income can include recovery for lost or diminished earning potential as well. That is, you can be compensated for no longer being able to earn as much money.

Remember, There Must Be Fault

First, it’s important to remember that the fact that you are injured does not, by itself, mean that you are entitled to compensation. For there to be economic recovery, in most cases, there must be fault, which means that either another party was negligent (unreasonably careless) or intentionally acted wrongfully. So before considering lost income, you need to evaluate whether someone else is liable for your injury because of negligent or intentional acts.

(There is a significant exception: in many cases, if you were injured by a defective product, then the fact of injury by itself is enough to establish liability).

In car accidents, this means that if you were injured by a careless driver—someone driving too fast, or going through stop signs and red lights, or texting/cell phoning while driving, or DUI/DWI, etc.—you probably are entitled to economic recovery.

Lost Income

When you’re injured by someone else’s fault, you are entitled to recover for all your losses. This includes any income you lost because you couldn’t work. For example, if you missed eight weeks of work due to injury, you could sue for eight weeks of wages or salary. Or if you missed, 60 days over the course of a year due to your injury, you could recover for those 60 days—the lost wages don’t need to have been lost all at once.

Earning Capacity

What if you can no longer earn as much as you used to? For example, say you were a construction worker who had been earning $35 per hour, but now can’t stand for long periods or lift heavy weights. If due to your injuries, the best job you could get, given your physical condition and qualifications, is as a security guard for $12 per hour, you could recover the difference: $23 per hour. And you can recover it not just for lost earnings to date, but also going forward, into the future. If for the next year 20 years, until retirement age, you are going to earn $860 a week less, then you could potentially recover $860/week x 52 weeks/year x 20 years = $894,400.

That’s an oversimplification, of course. First, you’d have to prove by expert testimony the most you could earn, not just this year, but going forward—for example, suppose you’re making progress and could possibly be fully recovered in five years; that will affect  what you might receive. The possibilities of raises and promotions would be considered. Amounts would be adjusted for inflation, for investment opportunities, for a whole host of other factors.  The actual determination can be very complex, but the theory is still simple: you are entitled to be compensated for both lost income and for loss of the ability to earn a living.

How an Attorney Can Help

A lawyer can help you understand what you actually might be entitled to; the attorney will have the knowledge, experience, and resources to determine what people like you, injured the way you were, could or have in fact received. In addition, the lawyer can evaluate the strength of your case and the cost to pursue it, letting you make an informed decision as to what to do.