If you’ve suffered injuries in an accident that prevent you from working or reduce your ability to earn a living in the future, you may be entitled to compensation for those losses. Your compensation may include your loss of earnings and diminished earning capacity. These are two key components of economic damages that can significantly impact the total amount of compensation you can recover in a personal injury claim.
What Is Loss of Earnings?
Loss of earnings refers to the income you have lost due to an injury that prevents you from working. In personal injury cases, it is one category of economic damages you can recover (you may also be entitled to non-economic damages, like pain and suffering).
For example, if you are injured in a car accident and have to take time off work to recover, the income you lose during that time can be compensated. This could include:
- Wages you would have earned during the time you were unable to work.
- Bonuses, commissions, and tips that you would have received as part of your job.
- Sick leave or vacation pay that you had to use to cover your time off from work.
Loss of earnings is generally calculated based on your average income before the accident. The more serious your injuries and the longer you are unable to work, the higher your loss of earnings claim may be.
What Is Diminished Earning Capacity?
Unlike loss of earnings, diminished earning capacity refers to the long-term impact an injury has on your ability to earn income in the future. It applies when an injury permanently affects your ability to work at the same capacity or in the same job you held before the accident.
For example, if you suffer a serious back injury in a truck accident and you can no longer perform your physically demanding job, you may not be able to return to work. In this case, your diminished capacity could account for:
- A reduced ability to perform your job: If your injury makes it difficult or impossible to return to your previous role or perform the same tasks, your future earning potential may be reduced.
- The need for retraining or making career changes: If your injury forces you to change careers or take a lower-paying job, your long-term earnings will likely be diminished.
- Permanent disability: If your injury results in permanent disability that prevents you from working at all, your diminished earning capacity may include the total loss of future income.
Calculating diminished earning capacity is more complex than loss of earnings. It requires an analysis of your pre-accident job, the impact of the injury, and the likelihood of your ability to work in the future. An experienced personal injury attorney can help you work with expert witnesses to estimate this future loss of income.
How Are Loss of Earnings and Diminished Earning Capacity Damages Calculated?
The calculation of both loss of earnings and diminished earning capacity depends on several factors. In Kentucky, these calculations involve both past and future damages, including:
- Current wage information: If your injuries cause you to miss work, the immediate loss of wages will be based on your current salary or hourly wage. The amount you could have earned during your time off work will be added to your claim.
- Length of time you were unable to work: If you were unable to work for a certain period due to your injuries, your total loss of earnings will reflect the duration of your absence from the workforce. This is especially important in cases where recovery took a significant amount of time.
- Future impact: For diminished earning capacity, calculations will consider how the injury affects your long-term earning potential. This will involve projecting how much you would have earned if not for the accident and comparing that to what you can now reasonably expect to earn in the future.
- Type of injury: The severity of the injury and its impact on your ability to perform your job will affect the outcome of your claim. More severe injuries that result in permanent disability or long-term complications can lead to a higher amount of diminished earning capacity.
- Expert testimony: In many cases, expert witnesses, such as economists, vocational experts, and medical professionals, may be called upon to provide testimony. They will discuss the long-term effects of your injury on your earning ability. These experts can help quantify your lost wages and future earnings.
An experienced personal injury attorney can help you calculate the full extent of your damages.
Contact a Lexington Personal Injury Lawyer for a Free Consultation
If you or a loved one has been injured and is facing loss of earnings or diminished earning capacity, contact Ross Mann Personal Injury Lawyers. We offer an absolutely free legal consultation. We will assess your case, explain your legal options, and work diligently to secure the compensation you deserve.
Let our Lexington personal injury lawyers help you move forward after your injury and recover the financial compensation that reflects the full impact it has had on your life. Contact us online or call us at (859) 413-3900 for more information.
