If you are injured in an accident and you are prevented from working, you can get compensation for lost earnings. This usually requires you to present your claim with detailed evidence. When a personal injury includes serious harm and extensive medical treatment, it’s not uncommon for a claimant to temporarily or permanently lose the ability to return to work. When an injured person cannot work either because of physical limitations or emotional trauma, their lost earnings are a component of compensable personal injury damages. The injured person’s earnings must be proven by a preponderance of the evidence if the case makes its way to trial.


In any evaluation of lost earnings, the injured party will typically present evidence of lost income incurred up to the day of trial. However, evidence can also be used to prove future lost wages. Whenever one is presenting evidence of past lost earnings, the injured party generally provides testimony concerning his inability to work and the earnings that would have been received on the job.


Future lost earnings are usually more difficult to prove because the injured parties generally experience some degree of recovery over time that will eventually allow them to return to work on either a part-time or full-time basis. This makes proving future lost earnings somewhat of a challenge.


In any case where a future loss is made, evidence will also have to be offered on the length of time the person can be reasonably expected to have continued working. Juries are generally unlikely to award future damages beyond what would be considered normal retirement age. In addition, any such calculations must be reduced to present value, since a dollar today is worth more than a dollar in the future. Such present value calculations are often offset by evidence of earnings increasing over time at their place of employment. Future promotions as career progresses must also be factored into the equation.


As one might expect with so many factors in play, such calculations typically must be prepared by an accountant or similar experts who have the training and ability to go through this assessment of damages. Generally, an injured party cannot provide his or her opinion as to what their future lost income may be without the testimony of an expert.


Irrespective of the type of wage loss being evaluated by the jury, lost wages must always be established with a reasonable degree of certainty. Where injured parties make a claim for lost wages, their own testimony regarding past earning is sufficient to make a claim for lost wages. In addition, gross pay, as opposed to net or “take-home pay” is the proper basis for computing lost wages.


In many cases the injured party receives compensation in the form of bonuses or commissions. Arizona has held that evidence of past payment of bonuses and commissions is admissible to prove current lost income and is not considered speculative. In other words, injured parties must show the amount they might reasonably have earned while working their ordinary occupation during the period of incapacity. The average of earned commissions over time may be utilized as the basis for estimating this type of loss.

In some cases, injured parties may seek recovery for merely a decrease in their future earning capacity. The injured party typically bears the burden of establishing loss of earning capacity by providing some evidentiary basis which would permit recovery. The measure of damages for earning capacity is the difference between what the injured party was capable of earning before the injury and what he or she is capable of making after the injury. Factors which may be relevant concerning the measure of damages include the injured party’s age, life expectancy, health, habits, occupation, talents, skills, experience, training and industry. The determination of loss of earning capacity does not necessarily always turn on the difference between the plaintiff’s earnings before the injury and after the injury. In some circumstances, the plaintiff may have a diminished capacity even though his or her earnings have increased by the time of trial. However, the fact that the injured party at the time of trial is able to make more money than he or she did prior to the injury is a material fact for the jury to consider as to the extent of damages. It is important to note that even this formula cannot be applied to all injured parties. There are numerous classes of people for whom there would be no proof as to the value of their earning capacity. College students, children, retirees, and those working in a family business all have a capacity to earn, although often cannot state the value of those earnings. When that is the case, the injured party must show the potential or ability to earn money in the future.


When injured parties own their own business, they may be able to use lost profits to establish the loss of earning capacity. However, this claim may only be established if it was based on their own services, efforts and initiative, rather than the capital invested in their business or the labors of other, as the predominant factor in producing the profits of the business. When attempting to establish any wage loss to an insurance company or jury, it is critical to have the loss reviewed by competent legal counsel with experience in establishing such claims. Without that, you may be losing money from the insurance carrier that is rightfully your money!


This blog should be used for informational purposes only. It does not create an attorney-client relationship with any reader and should not be construed as legal advice. If you or someone you know wishes to seek the help of an experienced personal injury attorney regarding any type of injury, or other personal injury matters, call 480-461-5300 to speak to an attorney or email info@udallshumway.com for a free consultation to discuss your rights and options. Udall Shumway PLC is in Mesa, Arizona and is a full-service law firm.  We assist Individuals, families, businesses, schools and municipalities in Mesa and the Phoenix/East Valley.

Udall Shumway PLC
1138 N Alma School Rd Suite 101
Mesa, AZ 85201