Young injured woman in wheelchair with lawyer

Calculating “Lost Earning Capacity”

Paul Benson Law Firm  Nov. 6, 2023

If you or a loved one has ever been in an accident that resulted in an injury, you know how difficult the recovery process can be. This is especially true if the injury affected your ability to work immediately following the accident, or even months or years down the line if the injury partially or permanently disabled you.

When this happens and you file a workers’ compensation claim or a personal injury claim, you’ll likely be able to ask for compensation for lost income and perhaps lost earning capacity. However, these two amounts are not calculated the same way and must be approached differently when seeking damages.

If you’d like to work with a personal injury attorney to learn how to calculate lost earning capacity, call me at the Paul Benson Law Firm. I’m able to represent clients in and around Rock County, including Janesville and Beloit, Wisconsin. 

Loss of Income vs. Lost Earning Capacity 

To start with, you need to understand the difference between loss of earning capacity vs. lost income. Even though the two terms sound alike, they are treated differently in a legal sense. Both refer to income lost due to an injury, but one addresses income lost in the past, and the other addresses income lost in the future.   

  • Loss of earning capacity: This is also called “loss of future earnings” and is used to describe any income or earnings that a person would have made in the future had they not suffered an accidental injury. For example, if someone is paralyzed in an accident and their profession requires them to use their entire body, they won’t be able to earn income this way for the rest of their life. 

  • Lost income: Lost income is much simpler and describes the income lost in the past due to injuries. For instance, if an employee is injured on the job and can’t work for two weeks, they will be reimbursed their regular wages for those two weeks. 

How Is Lost Earning Capacity Calculated?

There are several factors that will be considered when calculating lost earning capacity that include but are not limited to: 

  • The injured individual’s profession 

  • Where they physically work and their home location 

  • Their education 

  • Their work history 

  • The skillset they bring to the job 

  • The market value of their position 

  • The wage rates 

  • Their promotion history and whether they would likely receive more promotions in the future  

How to Prove Lost Earning Capacity

Proving lost earning capacity can be a complex task, which is why it’s always in your best interests to work with a professional like a workplace injury attorney. This will require extensive evidence, documentation, and research to be performed to paint a clear picture of what your professional life would have looked like if you hadn’t been injured. You and your legal team will need to present a convincing case detailing the type of work you would be doing and how much you would be expected to earn over the years.  

Why You Should Work With an Attorney

Proving lost earning capacity is much harder than proving lost income, and insurers often challenge loss of earning capacity because they know how hard it can be to demonstrate. When you work with an experienced attorney, you’ll have a trusted ally and advocate with you the entire time, and someone who understands how these cases play out and what the insurer or court will need to see.

An attorney can also be especially helpful for those who were unemployed or underemployed at the time of their accident. Simply because you didn’t have a job when you were injured doesn’t mean you won’t be able to claim loss of earning capacity, but this will be a tougher case to present.

Protect Your Finances and Best Interests

If you live in the Janesville or Beloit, Wisconsin, areas and want to learn more about pursuing compensation for lost earning capacity, reach out to me at the Paul Benson Law Firm