“Loss of income” is a term used in personal injury cases which refers to a loss of wages or unemployment benefits that an individual loses as a result of the injury that is the basis of their personal injury claim. Loss of income specifically refers to the individual’s loss of monetary income due to the injuries that were inflicted upon them by the defendant. Loss of income may also be referred to as lost wages, loss of earnings, or lost earnings.
For example, if an individual was rendered unable to work for one week as a result of a car accident, in this case, they would sustain lost income for that week. Loss of income may also include:
- Wages from work;
- Commissions from sales;
- Bonuses; and
- Other benefits.
The loss of income cannot be attributed to a pre-existing medical condition that was not caused by the defendant’s actions. In addition, if the plaintiff does sue for loss of income, they are required to prove the amount of their lost income with reasonable certainty.
The defendant who is found responsible for the plaintiff’s injuries and their resulting loss of income may be required to compensate the plaintiff as part of the damages award that the court issues. This type of damages is considered to be compensatory instead of punitive.
The plaintiff’s income does not have to be lost all at one time in order to be recovered. For example, if the injury resulted in the plaintiff missing a total of forty days of work that is spread out over the course of a year, the plaintiff could still recover for the wages lost on those days.
However, the plaintiff would be required to show that the injury was responsible for those absences from work. For example, the plaintiff may show that they were required to miss various days at work due to other issues, including:
- Medical appointments;
- Physical therapy;
- A doctor’s order; and
What is Lost Earning Capacity?
The term lost earning capacity refers to the tangible decrease in an individual’s ability to earn income. It may also be referred to as:
It is important to note that loss of income is different from lost earning capacity. Loss of income refers to an individual’s past earnings that have already been lost as a result of the injury. Lost earning capacity, on the other hand, refers to future missed income that the individual has not yet earned.
An example of lost earning capacity would be if an individual’s shoulder was permanently injured due to the actions of the defendant. This injury may impair their ability to work in the future, especially if their job includes the use of their in activities such as heavy lifting. This type of injury may qualify for lost earning capacity and may entitle the individual to additional damages.
Determining lost earning capacity is complicated and includes the following factors:
- Reviewing the plaintiff’s work profile, which may include their:
- Abilities; and
- Work experience;
- Hiring an expert medical professional to act as a witness to demonstrate the extent of the injury as well as how it may affect the individual’s future work performance and ability; and
- Using the current market values and wage rates in order to determine the amount of income the plaintiff would have lost in the future.
The exact amount of an individual’s lost earning capacity will vary based on region. Different areas will have different standards of living and wage rates.
What is the Difference Between Loss of Income and Loss of Earning Capacity?
As previously noted, loss of income refers to past income whereas lost earning capacity refers to future income not yet earned. Generally, lost earning capacity tends to be much more difficult to prove than loss of income.
This is, in part, due to the fact that calculating lost earning capacity involves predicting the plaintiff’s work ability at a future date. It is difficult to make this type of determination in an exact manner.
In addition, the court making the rule may also need to consider other factors. These factors may include future promotions, raises, and improvements in talent or skill that would lead to an increase in the individual’s income. It is as though the court is tasked with making a projection of how the plaintiff’s future career would have played out had they not sustained the injury.
Loss of income is relatively simply to prove. This is because determining the amount simply requires examining the plaintiff’s work attendance record and their pay stubs. When calculating loss of income, the court is considering past events that are accurately reflected in the individual’s employment records. Because of this, determining loss of income is a relatively straightforward process.
Proving loss of income, however, may be more complex if the plaintiff is self employed or they work irregularly. Potential evidence of loss of income could include:
- Invoices; of
- Documentation of missed meetings or conferences.
Is Loss of Earnings the Same as Future Loss of Earnings?
Future loss of earnings or future loss of wages refers to a category of damages awarded in a personal injury claim. These damages may be awarded in cases where the injury has permanently limited the plaintiff’s ability to earn wages. Future loss of earnings is also referred to as impairment of earning power or loss of future earning capacity.
Personal injury laws do not require the plaintiff to suffer an actual loss of earnings or wages. An award for loss of future earnings is based on the individual’s potential to make money, even if they never actually exercise that potential.
How is Loss of Earnings Calculated?
Future loss of earnings is not calculated based on the individual’s actual earnings, either before or after their injury. Instead, these damages are calculated based on the individual’s ability to earn money.
The court estimates the individual’s earning capacity prior to their injury and then compares it to the reduced earning capacity that resulted from the injury. Damages for loss of earning capacity will be issued based on the difference in the individual’s potential earning power, now on what they actually earned previously.
The reasoning behind the future loss of earnings award is that the injury has seriously diminished the individual’s capacity to earn wages in the future. Therefore, even if they were unemployed prior to or at the time of their injury, it will not prevent the court from awarding damages for future loss of earnings.
In addition, the fact that the plaintiff was not completely disabled as a result of the injury will not prevent or reduce their claim of future loss of earnings. The individual’s award may be reduced or even completely barred if they contributed in some way to their own injuries. An award for future loss of earnings may be very powerful, as it may give the plaintiff compensation for their losses that is spread over the remainder of their working years.
Do I Need an Attorney for a Loss of Income or Lost Earning Capacity Claim?
Yes, it is essential to have the assistance of an experienced personal injury lawyer for any loss of income or loss earning capacity claims you may have. An 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 assist 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.