In California, personal injury law provides a pathway for plaintiffs to seek compensation for “lost earning capacity” resulting from accidents or wrongful acts. This type of compensation addresses future income loss due to injuries impairing a person’s ability to work. Our California personal injury lawyers explain how to recover for lost earning capacity in detail below.

What is the Difference Between Lost Wages and Lost Earning Capacity?

Lost Wages

Lost wages refer to the actual income lost from the time of injury until the lawsuit or settlement. This period is before the legal proceedings and can be proven with pay stubs, employment records, and other documentation reflecting the plaintiff’s earnings before the injury.

Lost Earning Capacity

Lost earning capacity pertains to the future income the plaintiff is reasonably certain to lose due to the injury. This calculation is more complex as it involves projecting future scenarios and the long-term impact on the plaintiff’s ability to earn. Jurors measure these damages by considering factors like the plaintiff’s age, occupation, skills, and the nature and extent of the injury.

Permanent vs. Non-Permanent Injuries

An injury does not necessarily need to be permanent to claim lost earning capacity. Plaintiffs can seek compensation if the injury has not been fully resolved by the time of settlement or trial. While this often applies to severe or permanent injuries, it can also include cases where the long-term effects are uncertain. For example, consider a plaintiff who suffers a debilitating back injury in a car accident. Initially, the prognosis might be unclear, with medical professionals unable to determine whether the injury will result in long-term disability or if the plaintiff will eventually recover full function. In such scenarios, uncertainty is crucial in calculating lost earning capacity.

Temporary Injuries

The law recognizes that even temporary injuries can significantly impact a person’s ability to earn a living. For instance, a professional athlete who suffers a serious but not permanent knee injury might be unable to play for several seasons, resulting in substantial lost income. Similarly, a construction worker with a severe but recoverable hand injury may face months or years of rehabilitation, during which they are unable to work at full capacity or may have to take a lower-paying, less physically demanding job.

Lost Earning Capacity Due to Re-Injury

Assessing lost earning capacity may consider the possibility of re-injury or aggravation of the condition, which could permanently impair the plaintiff’s earning potential. For example, suppose the initial injury has a high likelihood of causing chronic pain or recurring issues that might necessitate future medical treatments or surgeries. In that case, this risk is factored into the compensation.

Statute of Limitations for Suing for Lost Earnings

In California, most personal injury cases must be filed within two years from the date of the injury. This timeframe is known as the statute of limitations. The plaintiff loses the right to claim damages if the lawsuit is not filed within this period. However, there are exceptions. For example, in medical malpractice cases, the limitation period can be shorter, typically one year from when the plaintiff discovers or should have discovered the injury. This “discovery rule” acknowledges that some injuries or medical errors may not be immediately apparent. Plaintiffs must act promptly and seek legal advice to ensure they file their claim within the appropriate timeframe, preserving their right to seek compensation. There may also be certain actions that pause or toll the statute of limitations.

Income Included in Lost Earning Capacity

Lost earning capacity can encompass various forms of income and benefits, such as:

• Salary and wages
• Overtime pay
• Commissions and bonuses
• Self-employment income
• Future raises and promotions
• Benefits like vacation and sick days
• Contributions to retirement plans
• Perks like car allowances or free meals

Calculation of Damages

Calculating lost earning capacity involves several factors:

• Duration of the injury or incapacity
• Likelihood and timeline of returning to regular employment
• Plaintiff’s age and life expectancy pre-injury
• Health status before the accident
• Past earnings and nature of employment (fixed vs. performance-based)
• Employment contract terms and company policies
• Opportunities for promotion and professional growth
• Plaintiff’s career goals and interests
• Performance reviews and skills

Proving Lost Earning Capacity

To recover future lost earnings, they must be “reasonably certain.” Evidence used to prove lost earning capacity can include:

Employment Records

Historical earnings data, including pay stubs, tax returns, and employment contracts, establish the plaintiff’s pre-injury earning capacity. Evidence of past promotions, performance reviews, and potential career advancement opportunities help quantify the lost future income.

Medical Documentation

Detailed medical records are crucial, including diagnoses, treatment plans, and prognoses. These documents should illustrate the extent of the injury and its anticipated long-term effects on the plaintiff’s physical and mental health.

Expert Testimony

Expert testimony from doctors and specialists can provide authoritative insights into the injury’s impact on the plaintiff’s ability to work and the likelihood of future complications or permanent disabilities.

Vocational Experts

These professionals assess the plaintiff’s ability to return to their previous job or find suitable alternative employment. They evaluate the transferrable skills, job market conditions, and potential barriers to re-employment. They can also provide insight into necessary retraining or education, projecting the time and cost of the plaintiff’s potential career shift.

Economists

Economists analyze salary trends, inflation rates, and the economic impact of the injury over the plaintiff’s remaining working years. They calculate the present value of future lost earnings, considering factors like career growth, promotions, and raises that the plaintiff would have reasonably attained if not for the injury.

By understanding and effectively presenting these elements, plaintiffs can argue for compensation for lost earning capacity, ensuring fair compensation for the long-term impacts of their injuries.

Get Help from a Pro with Lost Earning Capacity

If you need assistance navigating the complexities of a personal injury claim for lost earning capacity, our experienced California personal injury lawyers are here to help. Contact us for a consultation to discuss your case and explore your options for recovery.