When you suffer a catastrophic accident, you not only have medical expenses, but lost wages too. In some cases, you may be unable to return to work for some time, which means running out of sick leave and having to survive on no income.
Worse, you could be permanently disabled – leaving you with no way to support yourself or your family. Even if you can return to work, you could have a partial disability, which means you cannot perform the same job duties or might have to take on a job with less pay and fewer hours.
Personal injury statutes offer protection for these very situations. When you are severely injured and cannot work, these statutes ensure you receive compensation for both your present and future lost wages.
Requesting compensation for lost wages or loss of future earnings is a very complex area of personal injury law. It requires a thorough understanding of the statutes, tax law, and the economy. No matter what attorney you hire, that attorney most likely employs a tax or economic specialist to ensure accurate calculations for lost wages and future earnings.
Therefore, this is not an area of the law that you can do yourself. Instead, you need a professional that can help accurately calculate your wages. Inaccurate calculations, even by a few dollars per month, could leave you and your family with much less than you need to thrive.
Lost wages and lost compensation are used interchangeably, but these are two different forms of damages.
To start, if you missed work because of your accident, you most likely qualify for lost wages.
Lost income, sometimes referred to as lost wages, refers to your actual wages missed because of your accident. Any salary you would receive for working, but did not because of your accident, qualifies for lost wages.
If you missed 22 days of full-time work, you could claim 22 days of full-time wages you missed in your lawsuit.
Lost compensation covers the other financial benefits that come from your employment, but not within the paycheck itself. Lost compensation could be included in your paycheck if you earn these financial benefits at your job. In some instances, self-employed individuals, freelancers, and part-time workers may not qualify for the lost compensation.
Some examples of lost compensation include:
Most plaintiffs overlook the other areas where they deserve compensation, such as vacation and sick days. A skilled personal injury attorney, on the other hand, does not. Your attorney will specify each of these in his or her demand letter along with documentation justifying why you deserve these forms of compensation.
Proving lost wages and compensation is relatively easy. The more documentation you have, the easier it is to make such claims on your demand letter to the insurer as well. Some forms of documentation to gather and bring to your attorney’s office include:
If you are self-employed, calculating your lost wages becomes more complicated. After all, you are the employer so you are not a third party who can legitimately verify your lost wages. Insurance claims adjusters like to scrutinize lost wage claims from self-employed plaintiffs.
However, your attorney can calculate your expected income from averaging the past few years tax returns – especially if your business has a consistent annual income.
Even if your business income is more complicated, your attorney can hire an accountant who specializes in self-employed income estimations to determine how much you would have earned, the estimated amount you lost, and so forth.
Future loss of earnings or a loss of earning capacity is not the same as lost wages. This calculation focuses on wages of the future; not those you have lost while recovering thus far.
These damages are applicable when you are permanently affected in terms of how much you can earn and work. Also, your potential future earning capacity is assessed, even if you have never worked before. For example, a high school student permanently disabled in an accident could still claim future loss of wages, because they would have worked after graduation.
The future loss of earnings is calculated differently than your current lost wages. It typically requires hiring several experts (such as an accountant and economist) to help calculate what you would have earned had you not been injured.
Most importantly, this form of damages focuses on your ability to earn money. The courts consider your earning capacity prior to the injury, then the amount your earning capacity was reduced because of your injuries.
Certain factors they consider include:
You do not only calculate your lost wages in these types of damages. In fact, you can request compensation for lost opportunities.
Every job has some sort of opportunity. Whether it is for a bonus, pay increase, or a higher paying position in the company. When you are injured, you miss out on these opportunities, which can further your career and increase compensation.
If you have enough evidence that you qualify, your attorney may work these lost opportunities into the calculation. For example, your boss verifies that he or she was considering you for a management position, but now that you cannot work you will be unable to take that higher paying position.
Certain factors could reduce your lost wages claim or even bar you from requesting them at all.
When you earn wages, you pay income tax. Therefore, you may wonder what would happen with your settlement for lost wages or future earnings. While the bulk of your injury settlement is tax-free, any portions designed to compensate for lost wages and future loss earnings are subject to taxation by the Internal Revenue Service (IRS) and state taxing authority.
If you have been seriously injured and you are unable to return to work, contact a personal injury attorney who can not only explore your options for lost wages, but other damages you may be entitled to as well.
You did not cause the accident; therefore, you should not have to use up your sick leave, vacation pay, and miss out on opportunities as a result. Instead, let an advocate fight for you and ensure you and your loved ones are financially stable while you recover.
Contact Berkowitz and Hanna LLC today to schedule a no-obligation consultation. Contact us online to get started.