When you are involved in an accident and are injured, one of the most fundamental questions that is up to a judge or jury to answer is the amount of your damages from the accident. As we have discussed before, there are numerous types of damages associated with a personal injury claim including property damage to the car, damages related to medical bills, and loss of the use of property such as the car that was hit.
However, one area of damages can be particularly confusing: lost wages and loss of earning capacity. Both involve money that is earned so why are they different? The key difference is when the money is earned or to be earned.
Loss of wages covers money that would have been earned by the person who was injured. The person was obviously not in a position to earn a wage because they were recuperating from the accident that was caused by the negligence of another person. Typically, there is a delay of months, and sometimes a year or more, from the time the accident occurred to when the suit is settled or a judgment is issued. During that time, the injured party may not be able to work at all or may work on a reduced schedule. Lost wages cover what the person would have made had they not been injured and could have kept working. Of course, if a person was unemployed at the time of the accident, they would not be entitled to lost wages.
Damages related to loss of wages cover a surprisingly comprehensive group of earning categories including of course wages – whether those are hourly or on a salaried basis – as well as overtime and extraneous wages such as commissions and bonuses. They also include health care benefits, sick leave, and personal or annual leave. Loss of income from a business can also be considered if the injured party is the owner or operator and relies on their business to earn money. The key to remembering that these all belong in the lost wages category is that they occurred in the past.
Loss of earning capacity, on the other hand, is solely concerned with future losses. It is attempting to put a dollar figure on what the injured person could have earned had they not been injured. The same categories of earnings covered by loss of wages are also included in loss of earning capacity including hourly or salary earnings, benefits such as additional per diem payments or health care coverage, and commissions and bonuses as well as leave. It also includes, however, future-leaning monies such as stock options and matching options for 401K and profit-sharing plans.
Proving these losses can be straightforward. For loss of wages, the proof comes from records from the person’s job showing their earnings, bonuses, and commissions. If the person runs a business or is otherwise self-employed, their own records would be used to show how much they would have made during that period had they not been injured.
However, proving loss of earning capacity is trickier as it essentially requires the creation of an alternative story wherein the person who was injured was never injured and continued to work and to earn. This story is not plucked out of thin air either but requires the help of numerous experts including vocational experts, economists, actuaries, and medical professionals. It is absolutely critical to have a skilled and knowledgeable car accident attorney involved in this process to ensure that your story is accurately told.
The experts will work to answer numerous questions to get the fullest possible picture of what the person’s earning capacity would have been had they not been injured and taken out of the workforce. The experts must testify as to how the injuries prevent the person from working at their previous job or in their prior profession, how much the person would have earned without the accident, how long the person would have worked, and what types of jobs the person would have been able to get depending on their field or industry.
They must take into account numerous factors such as how old the person was at the time of the accident and their life expectancy, the person’s employment status at the time of the accident, the person’s education and training, their plans for future employment, and the nature of their field or industry. This means also that individuals who are unemployed at the time of the accident can seek loss of earning capacity, particularly if they were highly trained or had in-demand skills.
From all of these experts’ testimonies, the highly proficient and competent Los Angeles car accident attorney will weave together a narrative of what the person’s life could have been like had they not been injured by the negligence of the party that caused the accident. As much as you can assign value to a life not yet lived, this is exactly what the process of determining loss of earning capacity will attempt to do. The key here is to answer the question of not what the person would have earned but what they could have earned.
Of course, the sky is not the limit here. If the injured person was a welder or a bus driver, it would be unlikely that they could claim future earnings like that of a best-selling novelist. The future earnings damages must reflect what was reasonably probable for the person to earn based on reasonable and projected career options.
As with all damages in a personal injury case, the goal is to restore the person back to their former self by putting a dollar sign on the value of this hypothetical future life. The best way to ensure that you are as completely compensated as possible for your injuries is to make sure you have a seasoned and highly competent Los Angeles car accident attorney by your side through every step of the process.
