What’s The Difference Between Lost Wages and Loss of Earning Capacity?

When making a claim for damages in a personal injury case, one of the things to consider is the economic damages that come from not being able to work due to the injury. Lost wages are the earnings lost from having to take time off from work for your recovery. Loss of earning capacity is more severe, and the condition is usually permanent.

This difference may be easier to understand by way of example.

Imagine you are a world-class concert pianist. One night, on the way to a major concert hall for a performance as part of your sold-out world tour, your car is hit by a drunk driver who ran a red light.

Due to an auto accident, you break both hands severely. You cancel the balance of your world tour. Due to the broken bones, you need nine weeks to recover, plus physical therapy after that to regain the use of your hands. The damages claim in this case would include an amount representing all the earnings you lost from having to cancel the remainder of your world tour performances. This example describes lost wages and usually refers to loss of past income.

Now imagine that your broken hands also have nerve damage beyond repair. Your hands suffer from paralysis, making it impossible for you to play the piano. In this case, the damages would include an amount representing all the earnings you lost as a complete loss of earning capacity for the rest of your career as a concert pianist. This loss of earning capacity usually refers to the loss of future earnings.

Loss of earnings capacity relates to the work you are doing or are qualified to be doing before the accident that causes a claim for personal injury. Loss of earning capacity does not mean you completely lose the ability to work. Instead, it relates to reducing your ability to perform the functions and duties of the work that you were qualified to do before the accident.

It is possible to have both a claim for lost wages and loss of earning capacity arising from the same accident.

Making a Claim for Lost Wages

Claiming lost wages is fairly uncomplicated if the person who is injured was working before the injury. It is a calculation of what the time off from work costs that person. The amount of time off may find support in a letter from a qualified healthcare practitioner that recommends the recovery period for the injury.

If a person is unemployed, the amount claimed for lost earnings is an estimate. The insurance adjuster may dispute this amount. The possibility of a dispute is one reason you need to be represented by an attorney in a personal injury case.

Making a Claim for Loss of Earnings

Claiming loss of earnings is much harder to calculate and prove. First, there is the need for a professional opinion regarding the inability to recover full functionality after the injury. Then, there is the estimation of the loss of earnings over a long time, such as a full career.

If the person was in a highly paid position before the accident and cannot work in the same job after the accident, the damage claim for a full career may be very large, even millions.

If you or someone in your family is injured in an accident that causes them to take time off from work or cannot work in the same job, call (281) 475-4535 for a free consultation.