Lost wages are an important element of personal injury claims, to ensure that the victims receive payment for the money they could not earn because of an accident or injury. Either you were off work for a few days or cannot go back to work for a long period, lost wages can have a serious effect on your financial position.
In this article, you will find out what lost wages are, how they are different from lost earning capacity, how to calculate them, and how to establish them in a personal injury case.
What Are Lost Wages?
Lost wages refer to the income you were unable to earn because of an injury caused by someone else’s negligence. This can include:
- Regular hourly wages or salary
- Overtime pay
- Bonuses or commissions
- Tips (for service industry workers)
- Paid time off (PTO) or sick leave used because of the injury
For example, if you are a delivery driver who cannot work for two weeks due to a car accident, the wages you would have earned during that period are considered lost wages.
Lost Wages vs. Lost Earning Capacity
It is essential to understand the difference between lost wages and lost earning capacity:
- Lost Wages: These are the earnings you missed because you could not work during your recovery period. They are actual, quantifiable losses.
- Lost Earning Capacity: This refers to the reduction in your ability to earn income in the future due to a permanent injury or disability. It is a projection of future losses rather than an exact figure.
Common Situations Leading to Lost Wages
Lost wages can occur in various situations, including:
1. Car Accidents
If you are injured in a car accident caused by another driver, you may miss work due to your injuries or medical appointments.
2. Workplace Accidents
Even if you are covered by workers’ compensation, you may be entitled to additional lost wages if a third party (such as a defective equipment manufacturer) was responsible for your injury.
3. Slip and Fall Accidents
If you slip and fall due to unsafe conditions on someone else’s property, you may be entitled to recover lost wages for the time you miss work due to your injuries.
4. Medical Malpractice
If a medical error causes you harm and prevents you from working, you may be able to claim lost wages as part of your compensation.
5. Assault or Battery
Victims of intentional harm may also recover lost wages if they are unable to work due to their injuries.
How to Prove Lost Wages
To recover lost wages in a personal injury claim, you must provide clear evidence of your missed income. This can include:
1. Pay Stubs or Salary Records
These documents show your regular earnings, making it easy to calculate the income you missed.
2. Employment Verification Letter
Your employer can provide a letter confirming your job title, salary, work schedule, and the time you missed due to your injury.
3. Tax Returns or W-2 Forms
For self-employed individuals or those who rely on tips and commissions, tax returns can help demonstrate your typical earnings.
4. Timekeeping Records
For hourly workers, timekeeping records can show the hours you would have worked if you had not been injured.
5. Medical Records and Doctor’s Notes
These documents can establish that your injury prevented you from working for a specific period.
How to Calculate Lost Wages
The method for calculating lost wages depends on your employment type:
1. Hourly Workers
Multiply your hourly wage by the number of hours you missed.
Example: If you earn $20 per hour and missed 40 hours of work, your lost wages are $800.
2. Salaried Employees
Divide your annual salary by the number of workdays in a year to determine your daily wage, then multiply by the number of days you missed.
Example: If you earn $50,000 per year and missed 10 workdays, your lost wages are approximately $1,923.
3. Commission-Based Employees
Calculate your average commissions over a specific period (such as the past year) and determine how much you would have earned during the time you missed.
4. Self-Employed Individuals
Use your tax returns, client invoices, and other financial records to establish your average income.
5. Workers with Tips or Bonuses
Provide records of your typical tips or bonuses to demonstrate your expected earnings during the missed period.
Special Considerations for Self-Employed Individuals
Calculating lost wages can be more complicated for self-employed individuals, freelancers, or business owners. In addition to tax returns, you may need to provide:
- Business income statements
- Client invoices
- Contracts showing agreed-upon payments
- Correspondence with clients indicating missed opportunities
Can You Claim Lost Wages for Future Missed Work?
In some cases, you may be entitled to recover lost wages for future missed work, especially if you are still undergoing medical treatment or are unable to return to work. This is typically known as “future lost wages” and may be part of a larger claim for lost earning capacity.
Can You Claim Lost Wages If You Use Paid Time Off?
Yes, you can claim lost wages even if you used paid time off (PTO) or sick leave. The reason is that you are being forced to use benefits that you would otherwise have saved for other purposes.
What If You Work Multiple Jobs?
If you have more than one job and are unable to work at any of them due to your injury, you can claim lost wages for all the jobs you missed. Be sure to provide documentation for each position.
How Insurance Companies May Challenge Lost Wages
Insurance companies may try to minimize your lost wages claim by arguing that:
- You could have returned to work sooner.
- Your injury was not severe enough to prevent you from working.
- Your lost wages calculation is inflated.
This is why it is essential to have strong evidence and, if necessary, the support of a skilled personal injury attorney.
What to Do If Your Claim Is Denied
If your lost wages claim is denied by an insurance company, you have several options:
- Request a Detailed Explanation: Ask the insurer to provide a clear reason for the denial.
- Submit Additional Evidence: Provide any missing documentation that may support your claim.
- File an Appeal: If your claim is through your own insurance policy, you may have the right to appeal the decision.
- Consult a Personal Injury Lawyer: An attorney can help you negotiate with the insurer or file a lawsuit to recover your lost wages.
Real-World Example of Lost Wages
Imagine you are a restaurant server earning $15 per hour plus an average of $200 in tips per week. After suffering a back injury in a car accident, you are unable to work for four weeks.
- Your hourly wages: $15 x 40 hours/week = $600 per week
- Your tips: $200 per week
- Total weekly earnings: $600 + $200 = $800
- Total lost wages for four weeks: $800 x 4 = $3,200
If your employer confirms these earnings and you provide medical records proving your injury, you have a strong case for recovering lost wages.
About the Author
Neil Bhartia
Neil Bhartia isn’t your typical, stuffy attorney that you see on TV. While some have their sights exclusively on money and treat their clients like a number, Neil takes a personal interest in every single client he has. As an empath, Neil understands that people that seek legal help are typically in an involuntary, and stressful situation, and he goes out of his way to diffuse the stress and educate clients on each every detail of the legal process.
