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In personal injury claims, including car accidents, lost wages are a critical factor in the settlement. Plaintiffs put forth these claims to get compensated for wages or earning capacity that they lost due to the injuries and the effect of the injuries they sustained from the accident.

However, lost wages are calculated in various forms and dependent on the Plaintiff’s type of employment and wage arrangements. In addition, other similar claims, including loss of income and future earning capacity, are considered part of the settlement. These additional claims can also be calculated differently.

The different calculations that may be applied in calculating lost wages for settlement purposes are as follows:

Hourly Paid Employees

Calculating lost wage claims for individuals that are paid on an hourly wage basis is pretty straightforward. However, note that this particular calculation applies only to individuals paid on an hourly basis and have a consistent or determined amount of work hours.

The calculation is as follows:

  • Take the hourly wage and then multiply by the hours missed due to the accident-related injuries. This number would be the total amount of lost wages incurred by the Plaintiff.

Hourly Paid Employees with Variable Hours

It is also essential to consider that while some individuals are paid hourly; some do not have a set amount of hours per week or period. In this instance, the calculation for lost wage claims would be:

  • Take the average of the number of hours worked from the last two or three months.
  • Then multiply that average amount of hours by the hourly wage. This number is the amount of lost wages incurred by the Plaintiff.

It is also important to note that if overtime hours are included in the variable hours calculation, then the individual must provide documentation from their employer that overtime is a regular part of their work schedule. Failure to provide this documentation makes the overtime hours presumptive, and those overtime hours will be taken out of the calculation.

Salaried Employees

Salaried employees are compensated a fixed amount regardless of how many hours they work each week. Typically, these employees are paid a set amount for a 40-hour workweek even if they work for more or fewer hours. Moreover, overtime generally does not apply to these types of employees.

To calculate lost wages for salaried employees:

  • Take the yearly salary and divide it by 2,080, which is the number of work hours in a year
  • Multiply the number from the calculation above by the hours missed due to your accident-related injuries; this number will be the amount of lost wages incurred by the Plaintiff.

Independent Contractors or Self-Employed Individuals, or Self-Employed Business Owners

Individuals classified as independent contractors, gig workers, freelancers, or self-employed business owners cannot technically claim lost wages since they do not receive wages. However, individuals under this classification can claim lost income as part of their damage settlements.

To calculate the specific earnings lost by the Plaintiff, they must:

  • Present documents such as a 1099 form, correspondence, invoice, or receipts that may show the amount of profits that they would have made if they were not injured in the accident.

Loss of Future Earning Potential

Another aspect of a personal injury claim that may be related but not interchangeable with lost wage claims is the loss of future earning potential.

This calculation centers on whether the Plaintiff has been left permanently disabled, rendering them unable to go back to their job, or having to scale down their hours, responsibilities, titles, or earning capacity due to the injuries they incurred on the accident.

To qualify for loss of future earning potential, the Plaintiff must prove the legitimacy of their claim by:

  • Showing proof of wages and income incurred before the injury. This can be established by providing tax returns, pay stubs, W-2s, 1099s, business profit, and loss statements, or employer statements.
  • Proof of medical evidence showing the Plaintiff’s medical history, treatment reports, and expert testimonies may indicate that due to the injuries incurred by the Plaintiff from the accident, their current or future earning capacity has either been reduced or eliminated.

The process of calculating the loss of earning potential is more complex than the loss of wage claims calculation. Such complexity is because more components are considered and examined in calculating the amount and the presumptive nature of some of these factors.

Some of the components considered in determining the reasonable settlement value in a loss of future earning potential includes:

  • The Plaintiff’s work profile;
  • The Plaintiff’s earning history;
  • The Plaintiff’s talents, skills, education, and abilities;
  • The Plaintiff’s age and other physical and mental capabilities before the injury;
  • The medical expert professional’s determination the extent of the injury;
  • The injury’s relation to the nature of the Plaintiff’s job;
  • The costs of additional training for a Plaintiff to return to work in a new field;
  • Using the current market value and wage rates, the calculation would focus on the amount of income that the Plaintiff would earn today and in the future.

As one can discern from the information provided in the article, calculating for loss wages, income wages, and loss of future earning capacity can be complicated. Thus, the assistance of a knowledgeable personal injury lawyer can help you ensure that the proper compensation is awarded in your case.

If you or a loved one have been seriously injured in an accident that caused injuries that have affected your or their ability to earn a living, give us a call at (225) 963-9638, or contact us using the form below to arrange a free consultation so we can assess your claims. Our experienced personal injury attorneys can help you evaluate and prove your claim for lost wage, loss of income, or loss of future earning capacity so that you or your loved one can be rightfully and fully compensated for the injuries sustained.