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The Difference Between Lost Wages and Loss of Earning Capacity

Posted in Personal Injury

An accident such as a car crash or slip and fall can cause injuries that take you out of work for weeks, months or the foreseeable future. If someone else caused your accident, they may be responsible for your related losses of income. Understanding the difference between lost wages and loss of earning capacity from a legal perspective can help you fight for the compensation you deserve during a personal injury claim in New Mexico.

Lost Wages and Loss of Earning Capacity

What Are Lost Wages?

Lost wages refer to the income you have already lost by the time you file your injury claim. You may suffer lost wages while you are in the hospital receiving emergency care, for example, as well as in the following weeks while you recover from a serious injury. It is a calculation of all the wages, bonuses, overtime, tips, commission and other sources of income that you would have made in the days between your accident and filing a claim had the accident not happened.

If your injury took you out of work for 14 shifts, for example, your lost wages would be 14 shifts’ worth of missed earnings and employment benefits. You would also include any sick leave or vacation days you took because of your injury. You can calculate your lost wages using pay stubs from the few months prior to your injury to estimate the amount of income you most likely would have made had you been able to go to work.

What Is Loss of Earning Capacity?

If you have a long-term injury or permanent disability from the accident, you could be faced with the loss of the capacity (ability) to earn a living wage in the future. Your disability may make it impossible for you to go back to the career you previously had, forcing you to work at a lesser capacity or not at all. The loss of earning capacity is the income you foreseeably would have made in the future had the accident not taken place. It is the earnings you will lose after you have filed your claim.

It is more difficult to calculate lost earning capacity than lost wages, as you are estimating what your future earnings would have looked like had you not been injured. You may need help from a lawyer or accountant to accurately estimate your lost capacity to earn. You will use your previous pay stubs and earnings to gauge what you likely would have made in the future, as well as your education level, age at the time of the injury, foreseeable promotions or raises, and retirement benefits. You will also need to adjust for inflation.

If your doctor believes you will eventually make a full recovery and be able to return to work, your loss of earning capacity will only last as long as your inability to work. If, however, you have a permanent disability with a medical degree of probability, you can file a claim for a lifetime of lost earnings and employment benefits. You may also be able to seek financial compensation for lost wages and inheritance for the wrongful death of a loved one in New Mexico.

When to Contact a Personal Injury Lawyer

The most effective way to seek financial compensation for lost wages and lost earning capacity after an accident in Albuquerque is by hiring a personal injury lawyer. A lawyer can help you calculate your lost wages accurately and demand a reasonable amount from an insurance provider. Then, your lawyer can negotiate back and forth with the insurer to make sure you receive a fair and full award for existing and future lost wages. If the insurance company refuses to offer a fair amount – especially for a long-term or permanent disability – your lawyer can take your case to trial instead.

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