How Are Lost Wages Calculated?
Anderson Injury Lawyers | August 26, 2022 | Personal Injury
As part of your personal injury lawsuit, you should demand compensation for all of the wages you lost due to your injury. Lost wages include your paycheck, any lost benefits, your vacation time, and more.
If your injuries are permanent, you must estimate your future lost wages.
If the accident was work-related, you will probably have to deal with the workers’ compensation system rather than filing a lawsuit. The workers’ compensation system limits the reimbursement of lost wages but still does make up for some of your losses.
First Priority: Seek Immediate Medical Treatment
Of course, your doctor will give you this advice. We will, too, for legal rather than medical reasons. It is your injuries that justify missing work, and it is missing work that justifies your claim for lost wages. If you delay medical treatment, the insurance company (or whoever else will be paying your claim) will assert that your injuries predated the accident. In other words, they will assert that the accident did not cause your injuries.
Courts (and insurance companies) award lost wages for temporary losses arising from your accident. If you can never return to your previous position, you should seek compensation for diminished earning capacity. For a temporary loss of income, your “wages” should include the amount you would have made if you hadn’t missed work due to:
- Time in the hospital or time recuperating at home.
- Time spent on doctor’s appointments and treatment. This amount applies even if you can work during this time. It applies, for example, if you take half a day off to have your blood drawn at a medical testing facility.
- The sick leave and vacation time you used: Even though you didn’t directly lose an income, using sick leave depletes a resource you might need later. The value of sick leave and vacation time equals the amount you would have earned if you had worked that day.
You can also claim compensation for child care, parking fees, and similar expenses.
Proving Lost Wages
The following evidence is standard when you are trying to prove lost wages:
- A letter from your employer stating the relevant facts (your pay rate, how much work you missed, how much sick leave you used, etc.);
- Paystubs or their functional equivalents; and
- An employment contract, if you have one.
The lost wages calculation gets more complicated if you work on a freelance or entrepreneurial basis or if you work at several part-time jobs. Evidence that can help you prove your lost wages under these circumstances includes:
- Your federal tax returns for one or more of the most recent previous years;
- Evidence of payments received; and
- Correspondence proving how many meetings you missed because of your injury.
It is much more difficult to obtain reimbursement for lost financial opportunities than it is to recover for actual losses
Diminished Earning Capacity
Diminished earning capacity applies when your injuries are long-term or permanent. Slip and fall accidents, for example, often cause long-term disability. At some point during your treatment, your doctor will determine that you have reached Maximum Medical Improvement (MMI). MMI is the point beyond which no further improvement in your condition is likely.
If you reach MMI, but your injuries force you into a lower-paying position or prevent you from working, you should add diminished earning capacity to your claim. The younger you are and the more money you were making at the time of the accident, the more lifetime earnings you will lose, which will increase the amount of your compensation.
Proving Diminished Earning Capacity
Proving diminished earning capacity can be challenging because you might have to estimate your lost earnings decades into the future based on numerous assumptions. You will probably need one or more experts to calculate and justify compensation for diminished earning capacity. You might need the testimony of a doctor, a vocational expert, and an economics expert to arrive at a viable claim. Nevertheless, the amount of your claim could be very high.
Special Case: Workplace Accidents
If workers’ compensation applies to your claim (as it does to most workplace accidents), you are not eligible for lost earnings for the first seven days of your disability. After that, the Texas Division of Workers’ Compensation will calculate your “AWW” (average weekly wages including benefits, such as the value of employer-provided health insurance). Depending on your circumstances, you could be eligible for the following benefits:
- Temporary income benefits (70% of the difference between your pre-accident AWW and your post-accident AWW).
- Impairment income benefits (for cases of partial long-term impairment of your earning capacity): The doctor will assign you a percentage of impairment rating from 1 to 100. You will receive 70% of your AWW for whatever number of weeks that equals three times your impairment rating. If your impairment rating is 15, for example, you will receive these benefits for 45 weeks.
- Supplemental income benefits compensate workers who suffer long-term impairment. The amount is 80% of your previous AWW minus the wages you are making after your injury.
- Lifetime income benefits compensate workers with catastrophic injuries such as the complete loss of sight in both eyes, paraplegia, etc. The amount is 75% of your AWW with an annual 3% cost of living increase.
These payments are subject to maximum weekly amounts, which change frequently. As of 2022, the highest maximum for any of the preceding categories was slightly over $1,000 per week. Workers’ compensation claims are complex, and you probably need a workers’ compensation lawyer to assist you. Your lawyer might even find a loophole allowing you to file a personal injury lawsuit.