One significant loss you can suffer after an accident or personal injury is the inability to work and earn a living. If the harm sustained prevents you from working, you cannot make money, which worsens your financial situation, which is already strained due to property damage and medical expenses.

Significant financial damage you can recover after a negligent party causes you to sustain injuries that diminish or take away your ability to work is “lost earning capacity.” It compensates you for the projected job-related income you are reasonably sure to lose because of an accident or wrongful conduct. Discussed below is the process of claiming lost earning capacity in California.

Lost Wages vs. Lost Earning Potential

California statutes allow plaintiffs to pursue damages for past and future lost income. The income lost before the start of your injury lawsuit or the day you reach an agreement with the negligent party is lost wages. They refer to the out-of-pocket losses until the trial or settlement date.

Lost earning potential or capacity is the loss of potential to generate income that you could have accumulated in the future were it not for the injuries. The damages are usually difficult to demonstrate as the losses have yet to occur. Your injuries do not necessarily have to be permanent for you to obtain these damages. You can always seek compensation if the injuries are not completely healed by the time you enter into an agreement with the defendant or go to trial.

Typically, you will pursue loss of earning potential when you suffer severe or permanent injuries projected to take a long time to heal. Nevertheless, you can seek damages for minor injuries simply because the defendant has agreed to a settlement early enough due to the case’s uncertainty.

Lost Earning Potential vs. Lost Future Earnings

If you want to recover lost earning capacity, it is crucial to differentiate it from future income or earnings loss. Loss of future income refers to the particular figure you could have earned as a plaintiff if you could have continued working.

Considering the many possibilities, it is never easy to demonstrate the lost salary a worker could have earned in the future. Your current employer would have terminated you or run out of business. If your earnings are based on commission, there could be evidence that the product would have disappeared. Many uncertainties exist that make it difficult to calculate lost future income. The jury will require you to demonstrate the funds you will lose with reasonable certainty, a demanding evidentiary standard to satisfy.

Very few individuals are confident of their future earnings. For example, if you are young, chances are you could switch employers or professions before you can find a job you will settle for until retirement. Only plaintiffs nearing retirement can undoubtedly prove the lost future earnings because of the fewer existing uncertainties. For a younger worker, proving these damages is complex.

Many judges recognize that proving lost future earnings can impair your chances of obtaining compensation for your injuries. Therefore, many have turned to lost earning ability or capacity as a substitute for recovering lost future income.

A loss of earning potential happens when you lose your capacity to make a living, calculated using the lost ability or potential. However, lost future income is estimated using the earnings you could have generated.

For example, you, the plaintiff, are a high school student with no skills or job. Because you have no income history, it will be challenging to project lost future income when you sustain personal injuries from an accident or wrongful conduct. Your injury attorney can only succeed in obtaining compensation for a loss of minimum wage.

Nevertheless, you can seek compensation without an earning history regarding lost earning potential. If the harm sustained deters you from performing a broad scope of duties, the injuries have diminished your potential to generate income. The court will grant damages for the reduced earning capacity.

Timeline for Filing Your Injury Claim

Most California personal injury claims have a statute of limitations of twenty-four months, although some unique cases have shorter or extended timelines. For example, you must file an injury claim stemming from medical malpractice within twelve months. If you do not take action within this timeline, you will lose the right to pursue damages.

You have twenty-four months to file your claim for a personal injury. The time starts to accrue when you discover or ought to have discovered the injuries. You relinquish your constitutional right to pursue damages when you fail to bring the claim within this duration.

However, in cases where you are pursuing loss-of-earning potential damages, you can seek damages even after the lapse of twenty-four months. The reason is that your losses extend beyond the two years. Also, because of the nature of your injuries, it could have been challenging to resume work before the lapse of the provided timeline.

It would help if you spoke to your personal injury lawyer to estimate the duration for which you must sue for lost earning capacity.

Proving Lost Earning Potential

Demonstrating to the court that you have lost your capacity to make a living is more complex than proving lost wages or future income. Your attorney must prove that you could have continued earning a particular amount if not for the injuries. You must present projections, estimations, and evidence to meet the evidentiary standard of reasonable certainty. Typically, your attorney relies on testimony from expert witnesses to demonstrate the loss of earning potential.

The individuals you will need to testify during the trial are:

  • A Vocational Expert

A vocational rehabilitation expert will be critical in proving that you have lost earning ability after a personal injury or accident. The expert will give an insight into the skills you will require to perform the duties you used to complete before the accident if you have a work history. Also, the expert’s testimony will help shed light on the future tasks you can or cannot perform.

Similarly, a vocational expert will survey the market to determine the kind of labor or employment available for an individual with your impairment. Based on your career aspirations before the injuries, the expert can explain to the court if you can pursue the aspirations or not.

A vocational expert will also give their opinion on the average salary an individual with limitations like yours earns. If you aspire to pursue a particular career, the expert will provide their idea of the income successful individuals earn in the job you desire to follow. The jury will rely on the expert's testimony to calculate the damages you should receive for the loss of earning potential.

Sometimes, your attorney will call a vocational rehabilitation expert to testify about your treatment and whether and when you can resume work.

  • An Economist

The testimony of an expert economist can also strengthen your claim. An economist will evaluate the market trends in your profession and introduce them as proof in the lawsuit. If you are a graduate, the economist will present the salary trends of fellow graduates in your field and give their professional opinion of the amount you should be making had you not sustained injuries.

Furthermore, the economist can utilize the vocational limitations and lost future earnings to analyze the worth of your lost earning potential stemming from the injury. An economist will also help quantify potential losses from the vocational expert’s testimony, although the testimony is often enough to award damages.

  • Your Physician or Doctor

Your physician can furnish the court with test results from your medical examinations and testify about your health before the accident and how the injuries have diminished your earning capabilities.

Your doctor’s testimony is critical in the case, so you should help the claim by explaining how the injuries have impacted your life. The information you share with your doctor will appear in the medical report tabled in court as evidence of your lost potential to earn. Explain to them what you can no longer do because of the injuries.

Again, ensure you adhere to the doctor’s post-treatment instructions. If you engage in an activity the doctor has warned you against, and it worsens your injuries, the insurance company could use the information to damage the credibility of your claim for loss of earning ability and lower the amount the court will grant as damages.

  • Your Employer

Your injury attorney can also include the testimony of your employer in your injury lawsuit. The employer will testify about your employment history, work performance, and promotional opportunities ahead of you before the personal injuries.

Moreover, the employer can furnish the court with a letter that outlines the following:

  • Your job title.
  • The date you were hired.
  • Employer’s confirmation that you were still their worker when you were involved in an accident or suffered personal injury.
  • Your weekly working hours.
  • Your pay rate and payment frequency.
  • Your overtime rates and the overtime hours you work per week.
  • The days or hours you have skipped work to go for a physician’s or therapist’s appointment.
  • The funds you could have expected to earn overtime, bonuses, and commission.

The testimony of your friends, colleagues, and family is also critical in receiving compensation for lost earning potential. They will testify about how your life has turned for the worse after the injuries. These individuals are better positioned to explain to the court the extent of harm the injuries have caused your life.

The Evidence You Will Need to Prove Your Claim

The pieces of evidence the experts who will testify in court need to support your testimony include:

  • Certifications, licenses, and degree documentation.
  • Documents of your past salary or earnings before the injuries.
  • Analysis of salary trends in your field.
  • Medical records and reports.

Incomes Included in Lost Earning Potential Claims

Various types of income are used to determine your earning ability. These incomes are:

  • Raises.
  • Bonuses.
  • Salary.
  • Overtime.
  • Self-employment income.
  • Vocational, personal, and sick days.
  • 401k.
  • Lost perks like motor vehicle allowances.
  • Commissions.

Factors Determining Lost Earning Potential

Several factors come into play when determining lost earning ability. These are:

  • The expected duration of the injuries or diminished potential.
  • When, if possible, you are expected to resume work.
  • Your age.
  • Your life expectancy.
  • The remaining work years before you retire.
  • Your health before the injuries.
  • Your past earnings.
  • Whether your earnings were fixed or based on performance.
  • The terms of your employment contract.
  • Employer’s policies on promotion, pay raises, and other employment benefits.
  • Promotion opportunities in your specialty.
  • Your future career goals and interests.
  • Your performance reviews and talents.

Your attorney will require detailed information about your career until you sustain injuries to build a convincing claim.

Factors that Complicate Calculation of Loss of Earning Capacity

Estimating a loss in your capacity to generate income is not always straightforward. The following factors complicate the estimations. These are:

A Young Plaintiff

Claiming a loss of the capacity to earn a living for a young student with no skills or work history is complicated. Your attorney will find it challenging to prove you have lost or diminished your potential to earn a living. However, they can convince the court that it is expected that when you grow up, you will work, although it is difficult to know in what field you are expected to work.

The Plaintiff is Self-employed with an Unstable Income

Loss of capacity to earn a living is difficult to calculate, but it is more challenging when you are self-employed at the time of the accident. The issues the court will consider to determine your compensation include:

  • Business size.
  • Income lost for the duration you have been away.
  • Tax records proving your business earnings.
  • Capacity to take part in the affected business.

If your business has existed for a long time and has a steady income, it can be easy to estimate the loss of earning potential. You will provide the court with tax documents from previous years, bank statements, deposited checks, client affidavits, business invoices, and client contracts to show the business income and project future growth. Nevertheless, the calculations will be complex if the business is new.

A Non-Working Plaintiff

Even if you lack an employment history or were jobless when the accident happened, you can still pursue your lost earning potential, although it will be more challenging than if you were employed. The law seeks to compensate you for the lost future earning capacity and is not concerned with past income. Also, the court does not require you to demonstrate lost wages to award a loss of earning potential.

When you obtain personal injuries, for instance, as a music major student, and the harm permanently impairs your capacity to pursue your career, your attorney can use experts to estimate your earning potential if you were not injured.

Another excellent example is if you recently left your previous position as a machine operator and were looking for another job when you sustained personal injuries. Even if you were unemployed or between jobs during the accident, your skills and work experience are sufficient to claim lost earning ability.

The Plaintiff Has Long-Term But Not Disabling or Permanent Injuries

Personal injury statutes allow you to pursue loss of ability to earn damages even if your injuries are temporary or not disabling. However, this does not mean these claims are straightforward. You must hire a skilled attorney to guide you through the process.

For instance, you are a fourth-year law student working for a large and reputable firm in San Diego. Your annual pay is $300,000 plus bonuses. While working for the firm, you are actively looking for another job in a different city, and a firm has scheduled you for an interview for a partner job. As you go through your life, you are involved in a car accident caused by a drunk driver and sustained severe back injuries.

The injuries prevent you from going to work for two years, during which you are attending therapy. Your injuries are not permanent or disabling, but they only allow you to work ten hours a week, which is insufficient to achieve your career dreams. Additionally, the injuries have forced you to move back to your parents because you need a caregiver.

Your case is complex because it is likely that you could not have passed the interview and been offered a better-paying job. Also, because you were still in college, it is possible that after completing your education, you could have pursued a career other than law. Besides, your spine injuries are not permanent but long-term and have diminished your capacity to work.

Despite all these complexities, your attorney should work hard to demonstrate with reasonable certainty that you could have attended the interview, passed, made a partner in the new law firm, and continued to practice law.

Find a Competent San Diego Injury Attorney Near Me

It is critical to seek fair compensation when you suffer injuries from an accident or wrongful behavior. Recovering maximum financial damages requires thorough case analysis and identification of all losses incurred, including loss of earning capacity. At the San Diego Personal Injury Law Firm, we can assist in collecting and reviewing evidence to build a solid claim. Call us today at 619-478-4059 to speak to our attorneys.