- The individual’s earnings history.
- The medical prognosis of the injury, including how much recovery is possible (reduced to a percentage which gets applied to the wage figures).
- The scope of employment options available to the individual in light of the injury and the individual’s skills.
- Estimates of earnings growth, including the potential for reasonably foreseeable promotions, cost-of-living adjustments, and other factors.
- Lost benefits, like employer 401(k) contributions, lost pensions, and insurance coverage, including estimates of how the value of those benefits may have increased over time.
Serious injuries often force people to take time off work to recover. As a consequence, seeking compensation for lost income can be an important part of a personal injury lawsuit. Lost earnings come up in the damages phase of litigation, after the defendant’s liability for the injury is already established. Like other forms of damages, proving lost earnings can be harder than one might first assume. The simplest lost earnings scenario involves the individual who needs to take a certain, clearly defined amount of time off work and wants to be compensated for the wages that he or she didn’t earn during that time. This situation applies most clearly where the personal injury lawsuit is ongoing after the injured person has returned to work. Pay stubs from periods before and after the accident, tax forms from prior years (such as an IRS Form W-2 for people who work for an employer), or other forms of wage verification from an employer can be sufficient evidence to establish the amount of the lost wages. Someone who is self-employed can use tax records, checks from clients, or bank statements to establish the income that has been lost. Proving lost earnings gets more complicated if the person who was injured is no longer able to earn as much as before the injury, or has lost the ability to work altogether. In these cases the question is not just how much the injured person lost in the past, but also how large the person’s potential earnings were at the time of the injury. There are numerous ways to calculate future lost earnings, and some cases (like workers’ compensation) have predetermined methods. The analysis might consider one or more of the following: