What Is Loss of Earning Capacity?

One major financial cost of suffering a serious physical injury is the possible inability to work. If your injury prevents you from working, you cannot earn money, which only worsens the problem of paying for medical expenses and property damage. In personal injury cases, victims can recover compensation for lost wages resulting from the accident.

Sometimes, however, an injury causes a permanent or long-term inability to work that continues past the date of the court case and the order for the payment of damages. Fortunately, victims in personal injury cases can recover compensation for the loss of earning capacity. Damages for the loss of earning capacity are economic damages, designed to compensate the injured person for the loss of or reduction in the ability to earn future income.

To prove the loss of earning capacity, an injured person must prove the amount of money that he or she would have been able to make had the injury not happened. The amount must be proven with reasonable certainty, and since any calculation for the loss of earning capacity is necessarily speculative, it can be difficult to prove the amount of damages.

Calculating damages for lost wages is relatively simple, requiring an examination of work attendance and pay stubs to determine the amount of money not earned. However, calculating damages for the loss of earning capacity is much more complex. It requires making a prediction of the victim’s future work ability and future career, which may include raises, promotions, and other impacts to prospective income.

It is not necessary to have a work history to collect damages for loss of earning capacity, though it does make the calculation easier. To determine the value of lost earning capacity, courts may look at the injured person’s age and life expectancy, his or her profession or occupation, and any professional skills or qualifications. To recover damages for loss of earning capacity, an injured person does not have to completely lose the ability to work. An injured person can also recover damages for a reduced earning capacity, so the court may need to make a finding regarding the amount by which the capacity has been reduced.

An injured person may want to employ expert testimony to establish the amount of damages. For example, a medical expert may be used to determine the level of earning capacity lost because of the accident by testifying about the extent of the injury, how it affects the victim’s ability to work, and how long the disability will continue. However, expert testimony is not required to show a loss of earning capacity. It may also be useful to look at the current market rates of pay to determine the value of a person’s ability to work.

Having to pay medical expenses and repair property damage, on top of suffering the pain of an injury, is hard enough. Not being able to earn the money to cover those expenses makes the hardship even worse. If someone else’s actions have injured you, please contact the skilled San Jose personal injury attorneys at Corsiglia, McMahon & Allard, L.L.P. for a free initial consultation at (408) 289-1417.