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What’s the Difference Between Lost Wages and Loss of Earning Capacity?

Posted on June 14, 2021 Car Accidents

A serious accident can impact your life in many detrimental ways, including making it impossible to go back to work, either temporarily or permanently. Texas law allows an injured accident victim to seek financial recovery for the economic loss of missed time at work, both in the past and future. Understanding the difference between lost wages and the loss of earning capacity is important if you wish to obtain maximum compensation for your injury claim.
Lost Wages  VS Loss of Earning Capacity

What Are Lost Wages?

During a personal injury case, lost wages refer to all of the income, earnings, tips, compensation, sick leave, vacation pay, overtime, commission, business income, employment benefits and bonuses that an injured victim lost while being unable to work due to an injury. Lost wages specifically refer to the cost of missing work while recuperating from an accident. They make up for the income lost while the victim is in the hospital, undergoing treatments or physically recovering enough to go back to work.

What Is Loss of Earning Capacity?

The loss of earning capacity, on the other hand, refers to the victim’s reduced ability to earn a living wage in the future. This damage category is reserved for victims who have suffered life-changing injuries and disabilities, such as a paralyzing spinal cord injury, permanent brain damage or amputation. If the injury means the victim cannot return to his or her job in the same capacity as before the accident, the victim may be eligible for financial compensation for lost earning capacity.
Lost earning capacity can mean the difference between how much the victim used to make and how much he or she can make now with the new level of ability. For example, if the victim’s employer offered to keep the employee on as a part-time instead of a full-time employee, the victim could qualify for the difference between what he or she made before and what he or she makes now as the lost capacity to earn.
If the injury makes it impossible for the victim to work in any capacity, he or she could recover the full amount of the lost salary – adjusted for potential raises, promotions and inflation – for the number of years the victim foreseeably would have been able to work. The victim could also be eligible for financial compensation for lost 401K benefits, stock options and retirement benefits. The value of this award will depend on the extent of the disability, the age and overall health of the victim, and the victim’s income before and after the accident.

How Do You Prove Losses of Income?

If you get injured in an accident in Dallas that takes you out of work for a brief period or the foreseeable future, you may be eligible for financial compensation for past, current and future lost wages. It is up to you or your personal injury lawyer, however, to prove your losses of income before you can recover for them financially.
Proof of lost wages often comes in the form of pay stubs, employment documents, W2s and tax documents, customer invoices and billing statements, a letter from your employer, and your medical records. Remember, to recover for both lost wages and lost capacity to earn, you or your attorney must prove that you suffered losses of income before you filed the lawsuit, and that you will continue to lose earnings after.

What Is the Average Settlement for Lost Wages and Capacity to Earn?

There is no average settlement amount for lost wages in Texas. Every injury claim and client is unique. The value placed on your lost earnings and capacity to earn will depend on many factors that are unique to you and you alone, including your age, injury and income. For an in-depth case review and an accurate evaluation of your lost wage value, contact an attorney in Dallas today. An attorney can help you negotiate for maximum financial compensation for lost wages and lost capacity to earn.