In personal injury cases, the term loss of income refers to wages or employment benefits that are lost as a result of the injury that has caused the personal injury claim. Specifically, loss of income refers to the loss of monetary income because of the injuries inflicted upon the plaintiff by the defendant. Other terms for loss of income include lost wages, loss of earnings, or lost earnings.

An example of this would be if a person was unable to work for one week due to a car accident; in such a case, they will have lost income for the period of that week. Loss of income can cover wages from work, commissions from sales, and bonuses and other benefits.

Loss of income cannot be attributed to pre-existing medical conditions that were not caused by the defendant’s actions. Additionally, the plaintiff must be able to prove the amount of lost income with reasonable certainty. Defendants who are found responsible for the plaintiff’s injuries and resulting loss of income may be required to compensate for this as part of the damages award issued by the court. These damages are considered to be compensatory as opposed to punitive.

Income does not need to be lost all at once in order to be recovered. This means that if the injury resulted in the plaintiff missing a total of forty days of work spread out over the course of one year, the plaintiff could still recover for those days. However, the plaintiff would need to prove that the injury was responsible for those absences from work. For example, a plaintiff may show that they had to miss various work days due to medical appointments, physical therapy, a doctor’s order, or even surgery.

What Is Lost Earning Capacity?

The term lost earning capacity refers to a tangible decrease in a person’s ability to earn income. It is important to note that lost earning capacity is different from loss of income. Loss of income refers to past earnings that have already been lost because of the injury, whereas lost earning capacity covers future missed income that the plaintiff has not yet earned. Lost earning capacity can also be called future loss of earnings, or impairment of earning power.

An example of this would be if the plaintiff’s shoulder was permanently injured due to the defendant’s actions. This could impair their ability to work in the future, especially if their job is dependent upon the use of their arms such as heavy lifting. Such an injury could qualify for lost earning capacity, and may entitle the plaintiff to additional damages. Determining lost earning capacity is complex, and includes some of the following:

  • Reviewing the plaintiff’s work profile which could include their skills, talents, abilities, and work experience;
  • Hiring an expert medical professional to act as witness in order to determine the extent of the injury, and how it could affect future work performance and ability; and/or
  • Using current market values and wage rates in order to determine how much income the plaintiff would have lost in the future.

The exact calculation for lost earning capacity varies based on region, as different areas are associated with different standards of living and wage rates.

How Are Loss of Income and Lost Earning Capacity Different From Each Other?

As previously mentioned, loss of income refers to past income whereas lost earning capacity refers to future income. In general, lost earning capacity tends to be much more difficult to prove than loss of income. This is partially due to the fact that calculating lost earning capacity involves predicting the plaintiff’s work ability at a later, future date. Such a determination is difficult to determine exactly.

Additionally, the ruling court may also need to consider other factors. These factors could include future promotions, raises, and improvements in talent or skill that would lead to an increase in income. Essentially, it is as if the court is tasked with making a projection of how the plaintiff’s entire career would have played out had they not been injured.

Loss of income is relatively easy to prove. This is because the process simply involves examining the plaintiff’s work attendance record, as well as their pay stubs. As far as loss of income is concerned, the court is considering past events that are accurately reflected in employment records. This makes determining and compensating loss of income a relatively straightforward process.

However, proving loss of income can be a bit more complicated if the plaintiff is self employed, or if they work irregularly. Potential evidence could include any bills, invoices, or documentation of missed meetings or conferences.

Do I Need an Attorney for a Loss of Income Claim?

A skilled and knowledgeable personal injury attorney can help you file a claim and possibly receive damages for loss of income, loss of earning capacity, or both. The attorney will guide you through the process and let you know what documentation you should provide in order to best prove your case, as well as help you understand all of your options.

Additionally, the attorney can help you understand your state’s specific laws regarding future losses of income. Finally, an attorney may represent you at any necessary court hearings.