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Calculating “Lost Earning Capacity”

Law Office of James A. Maniatis March 21, 2023

Most states require businesses to provide workers’ compensation insurance to their employees. This coverage is essential for protecting workers should they sustain an injury while on the job and ensuring they’re adequately compensated.  

However, the process of filing a claim and pursuing compensation can be daunting, which is why many people choose to hire a workplace injury attorney to help them navigate this system. A common concern of workers that comes up in these cases is how they’ll be compensated if their injury is so serious they’re unable to continue working.  

If you’ve recently been hurt on the job and would like help learning how to calculate lost earning capacity, call me at the Law Office of James A. Maniatis, serving those in Southborough, Webster, and Shrewsbury, Massachusetts, as well as surrounding areas. 

Loss of Income vs. Lost Earning Capacity  

Before delving into how the calculations for earning capacity are done, it’s important to know the difference between loss of earning capacity vs. lost income. The main distinction between the two terms is that lost income (also called lost wages) refers to past income, while lost earning capacity (also called loss of future earnings) refers to future missed income.  

In both cases, the loss of income must be directly caused by the injury sustained at work, which could include time off due to medical appointments, surgery, recovery time, mental anguish, or permanent injuries that prevent you from being able to perform your job functions. Because lost income is based on previously missed work days, it’s much easier to determine, whereas future lost wages are almost always harder to calculate and harder to prove. 

How Is Lost Earning Capacity Calculated?  

The actual calculations used for determining lost earning capacity are quite complicated, and it can be extremely helpful to work directly with a personal injury attorney to make sure you fully understand how it affects your specific case. Among other factors, your workers’ comp provider will review your current profession, work history, level of education, marketable skills, location, the market value of your job, current wage rates, expected retirement age, and promotion history. 

They will then use all this information along with the medical diagnosis of your injury (to the extent that it limits your job prospects) and compare it with your previous earnings. The difference between these numbers will be your future lost earnings. In some cases, it may be determined that you’re unable to work at all, while in others it may be that you can work reduced hours or transition to a different line of work that’s feasible given the restraints of your injury.  

How to Prove Lost Earning Capacity  

No matter what the circumstances of your specific case, proving lost earning capacity requires copious amounts of evidence and documentation. This could include past payslips, job descriptions, doctor’s diagnoses, testimony from medical experts both on your physical and mental health, or current medical research pertaining to your specific injury. You and your attorney will then use this information to present your case to the insurer outlining what you can reasonably expect from your future ability to earn income. 

Why You Should Work With an Attorney  

Insurers are always trying to save money, and one way they do this is by challenging claims of loss of earning capacity because they know how hard it is to prove. You should never attempt to argue over future lost earnings without the help of an experienced attorney. Your lawyer will help you gather and organize evidence, negotiate on your behalf with the insurer, and advocate for your basic rights. 

Protect Your Finances and Best Interests  

If you’ve just begun a workers’ compensation claim and are concerned about your future earning capacity, I can help. At the Law Office of James A. Maniatis, I can represent clients throughout the Commonwealth of Massachusetts, including Southborough, Webster, and Shrewsbury, Massachusetts, as well as Westborough, Northborough, Grafton, Boylston, Millbury, Upton, Dudley, and Oxford. Reach out today to schedule a consultation.