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Loss Earning Capacity
What is Loss Earning Capacity?
In a personal injury case, the plaintiff can recover damages for "lost earning capacity." These damages compensate the plaintiff for work-related income that is likely to be lost in the future as a result of the accident.
Lost Wages And Lost Earning Capacity
Under California law, lost wages and income can be recovered both for the past and for the future.
Loss of earnings or income before the beginning of a lawsuit or the effective date of a settlement agreement is usually referred to as "lost wages" in California. The claim of "lost earning capacity," however, refers to the plaintiff's inability to earn future income. As a result of the injury, he would have been reasonably certain to earn a significant amount of money if he didn't incur the injury. Lost future earnings, in contrast to lost wages, may be difficult to establish since they have yet to occur.
Permanent Injury
Whenever the plaintiff's injury has not completely healed by the time of settlement or trial, lost earning capacity can be awarded. These situations commonly occur in the event of serious or permanent injuries, such as traumatic brain injuries, which are projected to last for some time.
Alternatively, a settlement agreement could have been reached fairly quickly in a case with an uncertain outcome.
Suing For Lost Earnings
California has a two-year statute of limitations for personal injury cases. In other circumstances, the statute may be longer or shorter. The statute of limitations for filing medical malpractice cases in California is usually one year. In other words, the clock starts ticking when a plaintiff discovers or should have discovered that he or she is injured. An injured plaintiff loses his or her right to sue if he or she does not file a lawsuit within the applicable statute of limitations. When the plaintiff has suffered a serious injury, however, he or she may not have been able to return to work before the limitations period expires. The plaintiff can therefore recover for losses that extend beyond the end of the limitations period through lost earning capacity damages.
Type of Income
A person's "lost earning capacity" is the difference between: what he or she would have earned if not injured, and what he or she will earn because of the injury.
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Losing earnings capacity may include salaries, overtime pay, commissions, bonuses, self-employment income, raises, vacations, personal days, and 401K or profit-sharing contributions, as well as any other benefits (such as a car allowance).
Calculation of Damages
The following factors can be considered in determining lost earning capacity in California: length of the injury or incapacity; when, if ever, the plaintiff can expect to return to his/her regular job; plaintiff's age; plaintiff's life expectancy (before the injury)); the plaintiff's age at retirement, the plaintiff's health before the accident or injury, the plaintiff's past earnings, whether they were fixed or based on performance, the plaintiff's employment contract, if any promotions, raises, cost-of-living increases, and other perks are offered, and company policies regarding them; promotion opportunities in plaintiff's field; plaintiff's long-term employment goals and interests; plaintiff's performance reviews and talent; and anything else that might be relevant.
Proving Lost Earning Capacity In California
For a California personal injury case to be recoverable, future lost earnings must be reasonably certain. Previous earnings can also be helpful, but are not required. Tax returns, pay stubs, and employer's letters are useful documents. But proof of future lost wages can also include testimony from the plaintiff's employer.
Employers can testify about their employees' work performance and promotions. Doctors can testify about their patients. Patients are able to discuss their health before and after their injury, as well as how the injury has affected their ability to work. Vocational rehabilitation experts are available to help. In order to claim lost earnings capacity, expert witnesses may not always be needed. A vocational rehabilitation expert can testify, however, regarding the treatment the plaintiff will need and when the plaintiff will be able to return to work, in appropriate cases. An economist can also testify. Based on salary trends in the plaintiff's field of work or study, an economist can establish what the plaintiff could have earned. Colleagues, friends and family. A person who knows the plaintiff personally can describe what the plaintiff was like before the injury - including their life goals, interests, and activities.