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Calculating Lost Earning Capacity in a California Car Accident

After sustaining an injury in a California motor vehicle accident, whether caused by someone else’s negligence, carelessness, or other wrongful acts, you are entitled to compensation. An accident victim who is left unable to work temporarily or, in extreme cases, permanently, due to an accident-related injury, can quickly fall into debt. Fortunately, California realizes the heavy financial burden such circumstances can place on victims and their families. In California, victims have the right to seek compensation specifically for what is known as “loss of earning capacity” and other economic damages.

California Loss of Earning Capacity and Lost Wages

Lost earning capacity, or time and money yielded due to the detrimental loss of one’s ability to work and garner income in the future, can be calculated and recovered as compensation. Though both “lost wages” and loss of earning capacity are examples of economic damages, the two are notably different. Lost wages or loss of income refers to the money lost from being unable to work while you are recovering before either filing a suit or until a settlement goes into effect. Lost wages are typically easier to calculate as they have already transpired. However, loss of earning capacity looks to establish the hypothetical earnings an individual will lose out on, in the future, due to their injury.

Common Questions Regarding Loss of Earning Capacity

Loss of earning capacity income is not calculated as current wages but is instead a projection of what the victim would have presumably earned if they hadn’t been injured in the accident.

What types of income fall under “loss of earning capacity”?

Including income like hourly wages and salary pay, lost earning capacity examples also include benefits, 401ks, self-employed income (business owners), overtime pay, sick pay, vacation pay, commission, stock options, and potential raises.

 How is loss of earning capacity calculated?

To recover damages for loss of earning capacity, a thorough calculation is made. Along with analyzing earnings, the type of injury also needs to be considered; can you be fully rehabilitated? Will you be able to return to work in the future, and in what capacity, if at all? For example, your employer may be asked to testify about your job performance and outlook. The position you held and potential for growth, your educational background, workforce-related job trends, and the area you live and work in are some additional factors assessed. A medical expert may be asked to describe your injury and how it has impacted your life and health in the present and future. Having a skilled personal injury attorney with ample experience in cases involving economic damages is advisable.

Does an Injury have to be life-changing to qualify for loss of earning capacity?

A common misconception is that lost earning capacity only applies when the plaintiff has sustained an injury from which they cannot recover. However, this simply is not true. Even if the injury could or does resolve in the future, the plaintiff is still eligible for loss of earning capacity at the time of settlement or trial. A serious injury, but not necessarily life-altering, still allows a victim to pursue lost earning capacity damages.

Personal Injury Law in California

Proving that you have lost your earning capacity due to a personal injury is a complex process. Still, it is essential if you want to focus on your recovery plan and eliminate any stress related to debt, future medical costs, and living expenses. A personal injury attorney with extensive knowledge of California personal injury laws will know how to proceed and maximize your compensation successfully. If you or a loved one have suffered a severe injury following a California car accident, contacting an experienced Bay Area personal injury attorney is crucial.