After suffering an injury in an accident, you may hear a lot of unfamiliar legal and insurance terminology. One of these terms is “lost earning capacity,” which is not the same as loss of income. Lost earning capacity is a general category of damages that compensates for your ability to earn money in the future. It refers to the money you could have made but are unable to because of an injury that prevents you from working. Loss of income (or lost wages), on the other hand, is the money you’ve lost from the date of your injury to the date you can return to work.

Severe injuries can alter your career, lessen your hours to part-time, or cause lost opportunities for promotions and pay raises.

How do you calculate lost earning capacity?

Calculating lost earning capacity typically requires input from vocational experts, economists, and other financial professionals. Here’s how it’s usually done:

• Earning history analysis: Experts look at your past job records, tax returns, and earnings to understand how much they used to make before the injury.
• Vocational evaluation: They assess your skills, work experience, and how the injury limits your ability to work. This helps identify what jobs they can do now and in the future.
• Economic projections: Economists use data and trends to predict how much money you could have earned if you hadn’t been injured. They consider things like inflation, wage growth, and career advancements.
• Life care planning: For serious injuries needing ongoing medical care, experts estimate the cost of future treatments and devices. These costs affect your ability to work and earn money.

By combining these methods, experts can give courts and juries a more clear picture of the financial impact of your injury. It’s important to have skilled professionals involved in this process to ensure fairness and accuracy in determining the lost earning capacity. Our Knoxville attorneys can help.

What factors do the court consider when determining lost earning capacity?

When courts determine lost earning capacity in personal injury cases, they consider several key factors to assess the financial impact of the injury on your ability to earn income. Here are some of the main factors:

• Severity of the injury: The court evaluates the severity of the injury and how it affects your ability to work. More severe injuries that result in long-term or permanent disabilities typically lead to higher estimates of lost earning capacity.
• Your age: Younger folks generally have more years of potential work ahead of them, so the impact of your injury on your future earning capacity may be greater compared to older individuals nearing retirement age, or lower if you’re nearing retirement yourself.
• Education and training: The court considers your level of education, specialized training, and skill set. Higher levels of education and specialized skills often lead to higher earning potential, and the loss of these opportunities due to injury is factored into the calculation of lost earning capacity.
• Work experience and employment history: Your work experience, employment history, and past earnings provide insight into your earning potential before the injury occurred. Courts may review employment records, performance evaluations, and salary history to assess the impact of the injury on future earnings.
• Vocational rehabilitation: If you undergo vocational rehabilitation or retraining to pursue alternative employment opportunities, the court considers the potential impact of these efforts on your future earning capacity.
• Economic projections: Courts rely on economic experts to provide projections of future earning potential, based on factors such as inflation rates, wage growth, industry trends, and career advancement opportunities in relevant fields.
• Mitigation efforts: The court evaluates whether you made reasonable efforts to mitigate your losses by seeking medical treatment, vocational rehabilitation, or pursuing alternative employment opportunities after the injury.
• Medical evidence: The court considers medical evidence related to the nature and extent of the injury, including medical reports, diagnostic tests, and expert testimony, to assess its impact on the individual’s ability to work and earn income.

By considering these factors along with expert testimony and evidence presented during trial, courts work to make fair and equitable determinations regarding lost earning capacity in personal injury cases. The goal is to provide compensation that adequately reflects your financial losses as a result of the injury.

Lost earning capacity is an important part of the compensation process, along with your medical expenses and lost wages. If you were injured in an accident and your injuries are affecting your job, you need to talk to the Knoxville personal injury lawyers at Banks & Jones. We can help determine the true nature of your losses, including lost earning capacity. If you’re ready to get started on your claim, call our office or submit our contact form to schedule your free case evaluation today.