A serious injury can affect more than your health. It can also keep you from working, reduce your hours, or limit the kind of work you can do in the future. When this happens, lost income may become an important part of a personal injury claim.
In California, damages are meant to compensate someone who suffers harm because of another person’s unlawful act or omission. Loss of earnings and diminished earning capacity are two types of economic damages that may be available to personal injury victims. Keep reading to learn about the distinction between the two and how they apply to personal injury cases.
What Is Loss of Earnings?
Loss of earnings refers to income you have already missed because of an injury. This can include wages, salary, tips, bonuses, commissions, overtime, and other pay you would have earned if the accident had not happened.
For example, you may have a loss of earnings claim if you missed two months of work after a car crash in Bell. You may also have a claim if you had to reduce your hours while healing.
California’s civil jury instructions explain that a person seeking past lost earnings must prove the amount of income, wages, salary, or earnings lost to date. Future lost earnings must be reasonably certain to be lost because of the injury.
What Is Diminished Earning Capacity?
Diminished earning capacity is different from missed paychecks. It refers to the loss of your ability to earn money in the future. This can apply when an injury affects your long-term work options.
For example, a construction worker with a serious back injury may no longer be able to lift heavy materials. A delivery driver with a lasting leg injury may be unable to drive for long periods. An office worker with a brain injury may struggle with focus, memory, or screen time.
California’s jury instructions state that a person seeking lost earning capacity must show that the injury will cause them to earn less money in the future and must prove the reasonable value of that loss. The jury may compare what the person likely could have earned without the injury to what they can still earn with the injury.
What Types of Income Can Be Included?
Income loss claims are not limited to hourly wages. The right proof depends on how you were paid and what work you did before the accident.
Your claim may include:
- Hourly wages
- Salary
- Overtime
- Bonuses
- Tips
- Commissions
- Gig work income
- Self-employment income
- Lost business opportunities
- Reduced benefits
- Lost retirement contributions
These losses should be supported by records when possible. Pay stubs, tax returns, bank records, employer letters, and business records may help show what you earned before the injury.
What Evidence Can Help Prove Lost Income?
Strong documentation can make an income loss claim easier to understand. Insurance companies often ask for proof before they agree to pay for missed work.
Helpful evidence may include:
- Pay stubs from before and after the accident
- W-2s or 1099 forms
- Tax returns
- Employer letters
- Time sheets
- Work schedules
- Doctor’s notes stating you are unable to work
- Medical records
- Business profit and loss records
- Client invoices
- Expert reports
Medical evidence is especially important. It can connect your work limits to the accident and explain why you could not return to your job right away.
Can Self-Employed Workers Recover Lost Income?
Yes. Self-employed workers, freelancers, contractors, and small business owners may be able to recover lost income after an accident. These claims can be more complex because there may not be a simple paycheck showing the loss.
A self-employed person may need to use tax returns, invoices, calendars, contracts, bank deposits, and business records. In some cases, an accountant or financial expert may help explain the losses.
For example, a self-employed contractor may lose income because they cannot complete jobs after an injury. A rideshare driver may lose money because they cannot sit or drive safely. A small business owner may lose profits because they cannot manage daily operations.
What Injuries Can Affect Earning Capacity?
Many injuries can affect a person’s ability to work. Some injuries make physical labor harder. Others affect thinking, communication, vision, or emotional health.
Injuries that may affect earning capacity include:
- Traumatic brain injuries
- Spinal cord injuries
- Herniated discs
- Broken bones
- Severe burns
- Amputations
- Nerve damage
- Chronic pain
- Vision or hearing loss
- Severe anxiety or PTSD
The long-term impact depends on your job duties, age, skills, education, recovery, and medical restrictions. A lasting injury may affect one career more than another.
How Are Future Earnings Calculated?
Future earnings are often calculated by looking at what you likely would have earned if the accident had not happened. This may include your work history, job skills, education, age, health, career path, and expected raises.
Experts may also consider what work you can still do after the injury. This can include whether you need job retraining or whether you must take lower-paying work.
These calculations can be disputed. Insurance companies may argue that you can still work, that your income would not have increased, or that your injury is not as limiting as you claim. Detailed records and expert opinions can help respond to these arguments.
Contact Our Bell Personal Injury Lawyers at Matadores Accident & Injury Lawyers for a Free Consultation
If an injury caused by another’s negligence has affected your job, income, or future career, you may be entitled to seek compensation for those losses. These claims can involve detailed records, medical proof, and careful review of how the injury changed your ability to work.
The attorneys at Matadores Accident & Injury Lawyers can investigate your accident, gather income records, and deal with the insurance company while you focus on your recovery. Contact us today at (323) 402-1000 to schedule a free consultation with our Bell personal injury lawyers.
