What is Lost Earning Capacity?
Lost earning capacity refers to the diminished ability to earn income in the future due to an injury or illness. Unlike lost wages, which account for income missed in the past and present, lost earning capacity focuses on future earnings an individual will miss out on because of their condition.
How is Lost Earning Capacity Calculated?
Calculating lost earning capacity involves analyzing several factors that directly impact an individual’s potential future earnings. These factors include:
- Age: Reflecting the remaining years an individual has in the workforce.
- Health and life expectancy: This factor determines how long and in what capacity a person can continue to work.
- Education and job skills: This factor influences the ability to secure alternative employment.
- Past earnings history: A person’s earning history serves as a benchmark for estimating future losses.
Primary Calculation Methods:
- The Human Capital Approach: Looks at the total income an individual could have expected to earn over their lifetime.
- The Discounted Earnings Approach: Adjusts the total income a person could have expected to earn during their life to its present value, taking into account inflation and changes in the labor market.
Both methods are essential in personal injury disputes, where determining the right compensation for lost earning capacity is critical. Expert testimony from economists and vocational experts often plays a key role in these calculations, providing a solid foundation for projecting future earnings losses.
Why Lost Earning Capacity Matters in Legal Claims
Lost earning capacity quantifies the future earnings an individual is deprived of due to injury, illness, or wrongful employment practices, ensuring that compensation awards genuinely reflect the extent of an individual’s financial losses. In personal injury cases, understanding and accurately calculating lost earning capacity is important for securing compensation that covers the income victims can no longer earn.
Impact on Quality of Life
The impact on quality of life due to lost earning capacity is significant. Financial stability plays a role in an individual’s wellbeing and their family’s security. Adequately compensating for lost earning capacity helps preserve this stability, addressing the broader effects of an injury on an individual’s lifestyle and future opportunities.
Compensation for Future Losses
Compensation for future losses provides financial security to individuals affected by injuries or wrongful employment actions. This compensation covers the earnings they would have generated, offering a form of financial assurance and recognition of their lost potential.
Evidence Needed to Prove Lost Earning Capacity
Medical records serve as the cornerstone of evidence when pursuing compensation for lost earning capacity. An accident victim’s medical records detail the nature and extent of the injury and its long-term implications. These documents establish a direct link between the injury and the diminished ability to earn.
- Documentation of injuries alongside prognosis reports demonstrates the severity of physical or mental impairments and their impact on employment capabilities.
- Employment history, including details on past salary and benefits, provides a clear picture of the financial losses suffered.
- Expert testimony from economists and vocational experts lend credibility to lost earning capacity claims.
Impact on Future Earnings
The impact on future earnings due to lost earning capacity is multifaceted. It can lead to lost promotion opportunities and, in many cases, require a complete career change. This shift not only changes the professional path an individual may have envisioned but also impacts their financial stability and growth over time.
Courts and Lost Earning Capacity
Courts are tasked with determining the appropriate financial compensation for individuals who have suffered due to injuries or wrongful employment actions. This process involves a thorough evaluation of evidence and expert testimony to determine the monetary value of lost future earnings.
Legal Representation to Mitigate Lost Earning Capacity Damages
Hiring a personal injury lawyer to represent you and accurately calculate compensation for lost earning capacity will ensure you pursue every penny of compensation you’re owed. Speaking with a personal injury attorney as soon as possible following an accident can increase your chances of recovering fair compensation for all accident-related losses.
Contact Us Today
If the injuries you suffered in an accident have prevented you from returning to work or forced you to change careers, you may be entitled to compensation. At the Ben Dominguez Law Firm, our personal injury lawyers offer free consultations. We can meet with you to explore your legal options and discuss how we can help you fight for the fair settlement you deserve. Contact us today to schedule a case review to learn more.
