Lost Income or Earning Capacity (Proving It)

Element of Damage – Loss of Earnings and Loss of Earning Capacity

If you have suffered an injury due to someone's negligence or wrongful act, you may have lost income, or lost earning capacity. They are different things though. Lost income is actual income lost. Lost earning capacity is the amount you could have earned had you not been injured. It sounds subtle, but it is different. The safe route is to always claim lost earning capacity, because lost income is encapsulated within lost earning capacity - just to make sure you don't restrict your claim by claiming the wrong type of damage.


A plaintiff should always present this element as “lost earning capacity”. Loss of earnings typically only covers “past” losses up to the date of trial, where loss of earning capacity covers the past as well, but also covers future losses. A loss of earning capacity must be from a physical injury that affects their earning ability. Future earning capacity awards are up to the discretion of a jury.

The following factors are considered in loss of earning capacity: 1) stamina; 2) weakness and degenerative injury resulting from the injury; 3) ability to work with pain; and 4) efficiency.

Even if a plaintiff has not actually suffered a direct loss, he may still recover loss of earning capacity in situations where 1) an employer keeps paying him even though not working (collateral source rule would typically keep this information out anyway); 2) where plaintiff was a student or housewife so did not work, but could have worked – but the injury kept them from finding a job if they had wanted to, they can recover under loss of earning capacity; 3) if they kept working despite injury, they can recover for loss of earning capacity; 4) even if they earned more than before, they can still make a loss of earning capacity claim; 5) where plaintiff could have taken higher paying work, but because of the injury he could not – he can recover loss of earning capacity; 6) there must be proof that the plaintiff could work in some fashion, but the injury impaired this ability in some way, in order to recover for loss of earning capacity.

The parent of a minor must make the claim for the minor for the minor’s loss of earning capacity.

All factors are considered in determining the loss of earning capacity.

Loss of earning capacity is not for actual past lost income, but is a claim for the capacity to earn money. But the plaintiff does have the burden of proof to show how to measure their loss of earning capacity. Sometimes this is easiest done by comparing the earnings before and after the injury.


Actual lost earnings is sufficient proof. Amount of lost time from work, regardless of direct economic loss is sufficient proof. Proof of efficiency, consistency, duration, ability get a job due to injury, all are evidence of lost earning capacity. A 7 year old with a brain injury was allowed to be awarded loss of earning capacity despite fact he was not working yet. Citizenship and immigration status are not bars to recovery. Past earnings do not necessarily need to be shown if there is some other way to calculate the loss of earning capacity (see 7 year old above). An economists opinions are admissible on loss of earning capacity.

Self Employment:

Methods of proof for the self employed include: Comparing the amount of money he would have made if he had worked for another company doing the same work, rather than for himself. Comparison of before and after business returns and financials. Lost profits from inability to continue working in normal fashion. Cost of hiring someone else to do the Plaintiff’s work.
You have to prove the worth of the self employed’s services with some degree of certainty that is susceptible (which varies by the case).

Cases where loss of earning capacity was not allowed: Plaintiff was getting a draw out of his business (but didn’t testify about loss of any type). Plaintiff turned down 9 jobs in construction but gave no proof as to what the profits on those jobs was supposed to be. Retired person testified that he “might” work again in future, but did not say he was looking for work before or during the injury period or even state he had plans to obtain job during that period of time.


Evidence of loss of earning capacity include: jobs held in past and amount earned; tax records; education and training; fringe benefits; advancement and promotion opportunities that are reasonable.

Collateral Source Rule: Bars mention of payments from welfare, Social Security, workers comp, and the sort.

Whether the amount awarded is taxable or not is not admissible to the jury to consider. (Of course the court reduces the award to 80% on their own by law – supposedly in consideration of the tax issue).

Experts (economists) are allowed to testify about loss of earning capacity based on hearsay evidence.

Personal Injury Areas We Help With Are:

Auto Accident and Injury Cases, Personal Injury Cases, 18 Wheeler & Commercial Vehicle Injury Accident Cases, Motorcycle Accident and Injury Cases, Wrongful Death Cases, Pedestrian Injured by Automobile Cases, Slip and Fall & Premises Cases, Workplace & Constructions Injury Cases, Dog Bite Injury Cases, Bicyclers Hit by Automobile Cases .

Types of Coverage in Automobile Injury Cases:

Automobile Liability Insurance, Uninsured Motorist Insurance, Personal Injury Protection (PIP), Medpay Insurance, Property Damage & Collision Coverages for Your Auto

Damages Often Recoverable in Personal Injury Cases Include the Following:

Past and future medical bills, past and future lost earning capacity, past and future lost income, past and future physical impairment, past and future disfigurement, past and future mental anguish, past and future pain and suffering, property damage, loss of use of your property - such as rental car bills, storage, total loss of property, diminished value of property, loss of body member (arm, leg, . . .), loss of body capacity (hearing, eyesight, . . . ), loss of consortium (spouse, parental, child/filial), loss of services, emotional/mental trauma (bystander injury), prenatal injury, exemplary damages, prejudgment interest, attorney's fees, and court costs.

By Doug Goyen, douggoyen@gmail.com 

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