The aftermath of an accident can be even more stressful if it negatively impacts your ability to learn a living. If your accident-related injuries prevent you from carrying out the tasks that are required in your line of work, it can be difficult to continue to support yourself financially unless you receive compensation for loss of earning capacity. Here’s what you need to know about loss of earning capacity and how it’s calculated in California.
What is the Meaning of Earning Capacity?
Earning capacity refers to your ability to earn income based on your skills, experience, and qualifications. It is not just about your current job but also your potential to earn in the future. After an accident, if your ability to work is diminished, you may be entitled to compensation for the loss of earning capacity.
Factors that influence your earning capacity include your unique qualifications and professional background, your academic and vocational achievements, and your physical and mental capacity to perform work. Your earning capacity is also influenced by the availability of jobs that match your skills and experience.
Accidents can lead to various types of injuries that might not only hinder your current job performance but also limit future opportunities. For instance, a severe back injury might prevent a construction worker from ever returning to heavy labor, while a traumatic brain injury could affect cognitive functions necessary for any role.
How Do You Calculate Loss of Earning Capacity?
Here’s an overview of the loss of earning capacity formula that may be used to calculate your loss of earning capacity after an accident. The objective of the loss of earning capacity formula is to calculate the negative impact the accident had on your current and future earnings. This way, you can seek fair and accurate compensation.
To calculate your loss of earning capacity, California courts and insurance providers will generally subtract your current capacity from your pre-injury earning capacity. Your lost future earning capacity will also be included in the calculation.
Factors that play a role in loss of earning capacity include your income before the accident, your potential income after the injury, and any potential promotions and salary increases you might have received. Your remaining working years, the impact of the injury on your ability to work, and the current job market and economic climate will also play a role.
To help ensure accurate calculations, a vocational expert may contribute to the evaluation of your case. These professionals can evaluate your ability to perform different types of work post-injury and provide testimony on how your injuries impact your earning potential. This expert testimony can be key in proving the extent of your lost earning capacity.
Here’s a simplified version of the formula that may be used:
Loss of Earning Capacity=(Pre-Injury Earnings−Post-Injury Earnings)×Years Remaining in Workforce
It’s important to ensure that your loss of earning capacity is calculated accurately, as this calculation will impact how much compensation you can seek. An experienced attorney can help make sure you receive the maximum benefit possible so that you can move on with your life and continue supporting yourself and your family.
Practical Example:
Imagine you were earning $60,000 annually before the accident. Due to your injuries, you can only earn $40,000 annually now. If you have 20 years left in your working life, your loss of earning capacity could be calculated as follows:
(60,000−40,000)×20=400,000
In this example, you might be entitled to $400,000 in compensation for loss of earning capacity.
It’s important to note that every situation is unique, and different factors may come into play depending on the specifics of your situation. In many cases, the calculation of lost earning capacity isn’t straightforward. Different career paths, potential for rehabilitation, and changing job markets can all influence the final amount. It’s important to approach this calculation with detailed evidence and professional support to ensure an accurate representation of your losses.
Legal Support for Loss of Earning Capacity Claims
If your ability to earn a living has been negatively impacted as a result of you being the victim of an accident, you deserve fair and accurate compensation. It’s therefore crucial that you work with an experienced attorney to help ensure you receive the compensation you need.
An attorney can assess the details of your accident and its impact on your earning capacity; gather medical records, employment history, and expert testimony; and work with insurance companies to secure a fair settlement. If the insurance providers do not agree to a fair settlement, your attorney can bring your case to court and represent you.
Dealing with insurance companies and opposing counsel after an injury can be overwhelming without proper support. Having a dedicated attorney on your side can make a significant difference in the outcome of your case. Your attorney can handle all legal aspects of your case while you focus on your recovery.
Get Fairly Compensated for Loss of Earning Capacity
If you’ve been injured and your ability to earn a living has been negatively impacted as a result, Sargon Law Group is here to help you receive the compensation you deserve. We are committed to achieving the best possible results for accident victims who are experiencing a loss of earning capacity.
The aftermath of an accident is a stressful time–especially if you’ve experienced loss of earning capacity–but you don’t have to handle these challenges alone. Let the Phoenix injury lawyers at Sargon Law Group provide the legal support and experience you need to secure your future. Contact us for a free consultation so we can fight for your rights and help you support yourself and your family.