The law allows you to seek compensation for lost earning capacity after your involvement in an accident or suffering injuries. Lost earning capacity is the future income that you will lose after the date of any case or out-of-court settlement. The court could award you lost earning capacity if you are unable to go back to work for a sustained period due to the injuries suffered in an accident. Usually, the court awards these damages in conjunction with "lost wages." "Lost wages" is the income you have already lost as of the date of the settlement or lawsuit. After being involved in an accident and suffering injuries, you should hire a personal injury attorney to help you determine and recover your lost earning capacity.

The History of Loss of Earning Capacity In The U.S

The concept of "lost earning capacity" is relatively new since it was developed in the 1970s. Before this, victims of accidents could only seek compensation for their lost wages. Compensation for lost wages did not cover the victim's reduced capacity to earn a living in the future. The "lost earning capacity" concept was established to offer an accurate and fair way to compensate victims of accidents for the full extent of their economic losses.

The first case to apply the concept of lost earning capacity involved the plaintiff in Rodriguez v. McDonnell Douglas. The Supreme Court ruled on the case in 1978. Rodriguez was a 40-year-old airplane mechanic who got involved in an accident at work and sustained injuries to his back and neck. He suffered a permanent, partial disability that prevented him from engaging in certain physical work. Before the accident, Rodriguez had excellent job prospects, earning a good salary. Sadly, after the accident, he never returned to his occupation. 

The court acknowledged that the traditional concept of compensation considered only the victim's lost wages up to the time of trial. It did not compensate the victims adequately for their reduced earning capacity in the future. The court ruled that even if Rodriguez had not suffered any actual loss of income, he was entitled to recover damages for losing his ability to earn a living in the future.

The judge stated that "lost earning capacity" considers the ability to earn a living as an asset that can be lost or impaired because of an injury. The judge insisted that compensation should be awarded for this loss, like any other type of property damage. The court concluded that Rodriguez had a right to recover damages for his loss of earning capacity. The ruling was made based on the testimony of an expert about the victim's future earning potential and the impact of the injuries on his ability to work.

The ruling set a precedent for future lawsuits involving loss of earning capacity in the entire U.S. It is a great development in personal injury law. Today, many victims have received their deserved compensation for the full extent of their economic losses.

The Procedure You Should Follow To Recover Lost Earning Capacity

You can only recover your lost earning capacity by proving that your injury has significantly reduced your ability to earn a living in the future. In this case, you need a detailed analysis of your pre-injury, current, and future earning potential. The analysis should consider factors like the nature of your injury, work experience, education, and your age.

You can seek compensation for your lost earning capacity once the analysis is complete. Some of the steps you should take to seek compensation for lost earning capacity include:

Seek Treatment

The first step is to seek treatment for your injuries. After examining you, your doctor will write a report about the extent of your injuries and the effect your injuries have on your ability to work.

Document Your Earnings Before The Accident

You should document your earnings before suffering the injury, including employment records, pay stubs, and tax returns. This will assist the court in determining earning capacity before the accident.

Document Your Present Earning Capacity

You should document your current earning capacity by considering your present employment. If you are not employed, you should prove that you can work in a different occupation or engage in business.

Establish The Extent and Nature of Your Injuries

You should document the extent and nature of your injuries because they could substantially impact your ability to work. You can do this by providing medical reports and expert testimony.

Hire a Personal Injury Attorney

You should seek the services of a skilled personal injury attorney if you believe you are entitled to compensation for your lost earning capacity.

Calculate Your Lost Earnings Capacity

Your attorney will help you calculate your lost earning capacity by subtracting your current earning capacity from your previous or pre-injury earning capacity. Add the difference to any future earning capacity lost because of your injuries.

File a Claim

Once you have determined your lost earnings capacity, you can file a claim with the liable party's insurance company or through the court.

Go To Trial Or Negotiate A Settlement

The liable party can offer you a settlement for your lost earnings capacity. You can decide to go to trial if you are unable to settle. The judge or jury will ascertain your rightful compensation.

Receive Compensation

The court will compensate you for your lost earnings capacity if your claim goes through. The compensation you receive will help you meet your living expenses. It will also offer you financial stability, despite your limited capacity to earn a living.

Proving Your Lost Income

If for many years you have had the same employer and job, determining future lost earnings can be as easy as proving:

  • Previous income plus.
  • Guaranteed or typical raises based on terms of a written contract, cost of living increases, or seniority.

Unfortunately, the calculation of lost earning capacity is usually not so straightforward. The following factors could complicate the calculation of lost earning capacity:

  • If your injuries are long-term but not completely disabling or permanent.
  • If you have an income that varies and are self-employed.
  • If your income is based in part on company performance or discretionary.
  • If you have a field of study or occupation with high earning potential.
  • If you are young.

Your personal injury attorney could prove your lost earning capacity by testifying and through the documents from the following people:

An Expert Economist

An expert economist can present evidence of salary trends in your specialization. He/she can also show salaries for other graduates of your school if you have a degree in higher learning. After doing so, he/she can offer an expert opinion on what you could have earned had you not been injured.

A skilled personal injury attorney also knows the information required in your case. He/she also knows how to work with lay witnesses and experts to establish the best case for recovering your lost earnings.

A Vocational Rehabilitation Expert

A vocational rehabilitation expert can give testimony about the further medication you will likely require in the future. An expert can also testify to how your injuries can influence your capacity to work part-time or full-time at your regular job.

Your Doctor

Your doctor can testify about your health before the accident and provide test results. He/she can also testify about your long-term prognosis. The doctor could also testify about how the accident affected your work capabilities.

Your Family And Friends

Your family and friends can testify regarding the impact of the injury on your activities. They can make the court understand what you were like before the accident and your life goals.

Your Employer

Your employer can give the following information:

  • The history of the company in promoting people with similar titles and job duties.
  • Prior work evaluations.
  • The history of your earnings.

Statute of Limitations For Lost Earning Capacity

The law does not define the period during which you must have had the injury to claim lost earning capacity. However, the court could award you lost earning capacity if the injuries prevent you from working for a long time. This period usually goes beyond the last date you can legally file a case. This is called the "limitations period" or "statute of limitations." The statute of limitations starts when you discover you have suffered an injury.

Most personal injury lawsuits have a statute of limitations that does not exceed two years. However, some cases, like medical malpractice, could have longer or shorter statutes of limitations. You could lose your right to sue for injuries if you fail to file a lawsuit within the applicable statute of limitations.

If you suffer a serious injury, you can be unable to resume work before the statute of limitations expires. In other cases, you can miss promotions and other opportunities for future advancement even if you return to work. However, the law allows you to seek compensation for these lost income and opportunities as long as you can reasonably establish these losses. A skilled attorney can make a big difference in enhancing a favorable outcome.

Calculating Loss of Earning Capacity

The following factors would determine the recovery of your lost future earnings:

  • Whether your income was performance-based or fixed.
  • Your long-term employment goals.
  • Typical raises you could have received.
  • Chances for promotion in your area of specialization.
  • The years remaining for your retirement.
  • Career performance and the record of your work.
  • Certifications, licenses, skills, and education.
  • Type of profession.
  • Market value.
  • Your health status before the injury or accident.
  • Expectancy of your work life.
  • Your life expectancy.
  • Your age.
  • Whether you can go back to your regular job.
  • The period your injuries will take to heal.

Lost earning capacity is calculated by subtracting what you probably will earn given your injuries from what you were reasonably likely to earn if you had not been injured.

Categories of Victims That Can Recover Lost Earnings Capacity

Any person who sustains injuries in an accident, which can restrict them from earning a living, can recover lost earnings capacity. You can recover lost earnings capacity if you have suffered an injury, even if it is yet to affect your current income. It is advisable to file a claim because the injury could affect you in the future. The following are victims who can recover lost earnings capacity:

Business Owners

You can recover lost earnings capacity if you are a business owner and have suffered an injury that has deprived you of the ability to run or manage your business.

Professional Athletes

You can recover lost earnings capacity if you are an athlete and have suffered an injury restricting you from engaging in sports. 

Victims With Medical conditions

You can claim lost earnings capacity if you have a medical condition, like a chronic illness, that has deprived you of your ability to work. It must be evident that you suffered the medical condition due to your employer's negligence. For example, if you suffered an illness due to exposure to harmful substances at work, you can file a lawsuit against your employer to recover lost earning capacity.

Victims of Slip-and-Fall Accidents

You can seek compensation for lost earnings capacity if you suffer an injury through a slip and fall and cannot work. Property owners or occupants have to maintain safe conditions on their premises. If your slip-and-fall accident was due to hazardous conditions on a property, you can file a lawsuit against the property owner or occupant.

Victims of Workplace Accidents

You are eligible for lost earning capacity if you have suffered an injury at the workplace and cannot work again.

Victims of Car Accidents

You qualify to claim lost earnings capacity after suffering injuries in a car accident and being unable to work in your previous occupation.

The Importance of Lost Earnings Capacity

Lost earnings capacity is necessary because it is a just and fair way to compensate accident victims for their reduced capacity to earn a living. If the courts had not developed this concept, victims of accidents would only recover lost wages. Lost wages cannot offer sufficient relief for the victim's economic losses. Lost earnings capacity also ensures that you continue supporting yourself and your loved ones despite your injuries.

The Difference Between Lost Wages And Lost Earning Capacity

You can seek compensation for all your economic losses if you suffer injuries in an accident. Under Nevada law, this compensation is known as "damages." This compensation covers the monetary losses you suffer because of the injuries you sustain in an accident. Economic damages are available, including rehabilitation, property damage, and past and future medical bills.

An injury can deprive you of the ability to work and earn a living, either while you recover or in the future. This can cause you to experience significant financial problems because of your inability to earn regular income or wages.

For example, you can be involved in a car accident caused by another negligent driver, causing injury to your leg. If you are also a driver for your company, this will affect your work and cause you to lose income. You can only claim compensation for lost wages if your leg heals and you resume work. On the other hand, you could be unable to resume work if the leg fails to heal fully. In this situation, you will not continue earning income. You will, therefore, claim for lost earning capacity. This is where you can recover the entire future income that you would have earned on the job if you had not suffered injuries.

The first notable difference between lost wages and lost earning capacity is that lost wages focus on the past. It covers mainly the income that you have already lost. On the other hand, lost earning capacity focuses on the future and the income you will lose going forward.

The other difference is the value of the damages claimed. You can easily prove lost wages because it is income you have already lost. The process is relatively straightforward because the judge will only consider your employment records. However, if your work is irregular or you are self-employed, calculating the compensation can be more difficult. The evidence you will require includes references, documentation of missed meetings, invoices, bills, or other potential income that you missed.

On the other hand, lost earning capacity considers the wages you have not earned yet since they are speculative. Typically, you cannot calculate lost earning capacity with absolute certainty. Many factors will come into play when deciding.

Find A Personal Injury Attorney Near Me

You are entitled to compensation for lost earnings capacity if you suffer injuries and cannot resume work or continue earning a living. Lost earnings capacity seeks to compensate victims of accidents and other injuries for their reduced living ability. For the best outcome, you should seek the services of a reputable personal injury attorney to help you determine whether you qualify for lost-earning capacity compensation. At the Las Vegas Personal Injury Attorney Law Firm, we can help you understand your rights and help you seek the compensation you deserve. Contact us at 702-996-1224 to speak to one of our attorneys.