Loss of Earnings/Diminished Earning Capacity

If someone’s misconduct causes you injury, Florida law probably entitles you to personal injury compensation. The two main forms of personal injury compensation are economic damages and non-economic damages. Loss of earnings and diminished earning capacity are two forms of economic damages. These two forms of compensation can be critical to a personal injury claim.

What’s the Difference Between the Two?

What’s the Difference Between the Two?

Loss of earnings refers to the earnings you have already lost by the time you file your claim. Diminished earning capacity, by contrast, refers to your anticipated loss of earnings in the future. Future lost earnings arise if you suffer a long-term or permanent occupational disability that prevents you from returning to your previous position. 

Loss of Earnings

Lost earnings covers:

  • Lost wages;
  • Overtime;
  • Bonuses; 
  • Tips;
  • Vacation time used;
  • Sick leave used; and
  • Any other work-related compensation benefits you lost.

You might have to translate your monthly salary into an hourly wage if you work on a salary. It is where you are self-employed that the calculation process can get tricky. Nevertheless, an experienced personal injury lawyer can help you calculate and prove your losses with precision.

Diminished Earning Capacity

Diminished earning capacity, also known as future lost earnings, applies when you find that your injuries temporarily or permanently prevent you from returning to your old job. 

Sometimes this means you must work at reduced hours. Other times, it means you must take a less-demanding, lower-paid position. In a worst-case scenario, it could mean that you never work again. An amputation is an example of a life-altering injury that could drastically reduce your future earning capacity.

The Stakes are High: What Happens If You Run Out of Money 10 Years From Now?

The danger in underestimating your diminished earning capacity, or being unable to prove the full extent of it, is that you might run out of money years from now and yet find yourself too disabled to return to your former position. This could leave you with major financial problems.

The problem is that no matter how dire your financial straits, you cannot come back and ask for more money. Once a court or a settlement agreement awards you money for personal injury, that much is all you are ever going to get. That is why it is critical that you get it right the first time. You must estimate and prove your total future losses appropriately, even if it means extrapolating decades into the future. 

Why Age Matters in a Diminished Earning Capacity Claim

In a personal injury lawsuit, you will seek lump sum compensation for all of your diminished earning capacity from the time of your claim until you recover or until you otherwise would have retired anyway. If your injury is permanent, age matters. The younger you are, the more years of work you will miss, or the more years you will work for a reduced income. 

Proving Diminished Earning Capacity

You might need to hire expert witnesses and assemble other evidence to prove the total amount of your diminished earning capacity. Evidence you can use to prove your diminished earning capacity might include:

  • Documentation of past income such as pay stubs, a letter from your employer, and past tax returns;
  • Testimony from a professional explaining how your injuries have affected your ability to perform the physical and mental tasks required for your former occupation and potential future occupations;
  • Testimony from your work supervisor about your former and current work capacity;
  • Testimony from a vocational rehabilitation expert to discuss your future rehabilitation needs and estimate the likelihood and extent of your eventual return to the workforce; and
  • Testimony from an economist to estimate your future earning prospects in light of economic realities. 

You will probably experience greater difficulty proving your diminished earning capacity if you were self-employed at the time of your accident. Nevertheless, an experienced lawyer can help.

A Fort Walton Beach Personal Injury Lawyer Can Help You Maximize Your Compensation

It’s not enough to “win,” meaning simply obtaining a verdict or a settlement. You must walk away with an amount that fully compensates you for your losses. As long as your personal injury lawyer works on a contingency fee basis, they have every incentive to help you make this happen because the more money you make, the more money they make.

A Fort Walton Beach personal injury lawyer will only take your case if they believe you have a strong claim. The best way to have a lawyer evaluate your claim is to schedule a free initial consultation. During the consultation, the lawyer will ask you questions that will allow you to describe your claim. Once you clearly understand your options, you can decide what to do next.