Free Consultation 24 Hour Response
Call Today Local (480) 498-8998
free consultation
no fee unless we win
F(480) 546-5262
Request Free Consultation
grand canyon

Key Differences Between Lost Wages and Loss of Earning Capacity

Posted on November 11, 2022 in

As the victim of a personal injury accident, it is important to fully understand the damages, or types of financial compensation, to which you are entitled by law from a defendant. This includes two different categories of damages for missed time at work: lost wages and loss of earning capacity. Lost wages refer to the earnings you have already missed, while loss of earning capacity is the loss of future earning potential due to a long-term or permanent disability.

What Are Lost Wages?

By the time an insurance claim or personal injury lawsuit is filed for an accident, most victims have already missed time at work. After an accident, you may have to forgo days or weeks of wages from taking time off of work while you undergo medical treatments and heal from your injuries. This includes vacation time or paid time off that you used because of your injury. Lost wages can include:

  • Hourly wage or salary
  • Unemployment benefits
  • Overtime pay
  • Tips or commission
  • Bonuses
  • Income from a business
  • Sick days, vacation days or personal leave

Essentially, lost wages refer to all forms of income and earnings that you have already missed by the time you file a personal injury claim. It encompasses the total amount that you reasonably would have earned from the time that your accident took place to when you can return to work. Lost wages are based on income earned in the few months prior to the accident. They can be proven using past pay stubs, wage documents, tax returns and letters from your employer.

What Is Loss of Earning Capacity?

Loss of earning capacity refers to future lost wages and earnings, or money that you can no longer earn because of your injury or disability. Unlike lost wages, future capacity to earn does not include money that you have already lost since the date of your accident. It is a projection of future earnings that you will foreseeably lose because of a long-term injury or disability. This type of compensation is typically available to victims who suffer debilitating or catastrophic injuries that interfere with their ability to work, such as:

Future lost capacity to earn can include hourly wages or salary the victim likely would have earned based on his or her work history, as well as potential promotions and raises that would have occurred in the future, overtime and other forms of irregular pay, work benefits, vacation time, bonuses, stock options, and 401K matching or other employment benefits. This type of loss is calculated with assistance from financial experts, medical experts, employment records and the victim’s doctor.

Proving Past and Future Losses of Income in a Personal Injury Claim

The key difference between lost wages and loss of earning capacity is that lost wages have happened in the past and loss of earning capacity happens in the future. Proving both types of losses may require assistance from a personal injury lawyer in Phoenix. A lawyer can collect evidence to prove your lost past and future wages, as well as negotiate a fair settlement with an insurance company on your behalf. 

Most personal injury cases in Arizona are resolved with settlements. If an insurer refuses to offer just compensation for the full amount of your lost earnings, however, an attorney can take your case to trial. Hiring an experienced and aggressive attorney to represent you can improve your chances of securing fair compensation for your losses of income as well as medical bills, property repairs, pain and suffering, and other damages. To learn more about recovering lost wages, contact Stone Rose Law to request a free consultation with an attorney.