How Are Lost Wages Calculated?

Bill Allen | December 3, 2024 | Personal Injury

If you’ve been injured in an accident caused by someone else’s negligence, you may be entitled to compensation for your losses. One significant loss that victims often experience is lost wages. Learning about how lost wages are calculated is essential to ensure you receive fair compensation.

It is helpful to understand what is included in lost wages, the difference between economic and non-economic damages, the types of supporting evidence needed, and how lost wages are calculated.

What Are Lost Wages?

Lost wages refer to the income you would have earned had you not been injured. This includes not only your regular salary or hourly wages but also other forms of compensation such as bonuses, commissions, overtime pay, and benefits like vacation and sick leave.

Lost wages cover the period from the date of the injury to the time you are able to return to work. Depending on the case, you may also recover compensation for future lost wages (diminished earning capacity).

Economic vs. Non-Economic Damages

In a personal injury case, damages are divided into two main categories: economic and non-economic damages.

Economic Damages

Economic damages are tangible, measurable losses that have a direct monetary value and include:

Medical expenses: Hospital bills, medication costs, rehabilitation, and future medical care
Lost wages: Income lost due to inability to work
Property damage: Repair or replacement costs for damaged property
Out-of-pocket expenses: Costs such as transportation to medical appointments

Non-Economic Damages

Non-economic damages are intangible losses that do not have a specific monetary value and include:

Pain and suffering: Physical pain and emotional distress caused by the injury
Emotional distress: Anxiety, depression, or psychological trauma resulting from the accident
Loss of enjoyment of life: Inability to participate in activities you once enjoyed
Loss of consortium: Impact on relationships with family members

Lost wages fall under economic damages because they represent a quantifiable financial loss.

Types of Supporting Evidence for Lost Wages

To successfully claim lost wages, you need to provide sufficient evidence to prove the amount of income you’ve lost.

Supporting evidence may include:

Pay stubs: Documentation of your regular earnings before the injury
Tax returns: Previous years’ tax filings to show consistent income levels
Employer statement: A letter from your employer confirming your salary, hours worked, and time missed due to the injury
Medical records: Documentation from your healthcare provider detailing your injuries and how they prevent you from working
Work schedule: Proof of scheduled hours, including overtime or upcoming projects that would have increased your earnings
Benefits statements: Information on lost benefits such as bonuses, commissions, or retirement contributions

Collecting and organizing this evidence strengthens your claim and helps ensure accurate calculation of lost wages.

How Are Lost Wages Calculated?

The method for calculating lost wages depends on your employment situation. Hiring an attorney is the best way to ensure you recover maximum compensation.

Salaried Employees

If you are a salaried employee, calculating lost wages is relatively straightforward. Divide your annual salary by the number of workdays in a year (usually 260 days) to find your daily wage. Multiply your daily wage by the number of days you were unable to work due to the injury.

For example:

Annual salary: $52,000
Daily wage: $52,000 ÷ 260 = $200
Days missed: 20
Lost wages: $200 × 20 = $4,000

Hourly Employees

For hourly workers, multiply your hourly rate by the number of hours you typically work. Then, multiply that by the number of days or weeks you were absent.

For example:

Hourly rate: $15
Hours per week: 40
Weeks missed: 4
Lost wages: $15 × 40 × 4 = $2,400

Overtime and Additional Income

If you regularly earn overtime, commissions, or bonuses, include these in your calculations. Use past pay stubs or employer statements to determine average additional earnings.

Self-Employed Individuals

Calculating lost wages for self-employed individuals can be more complex.

You may need to provide:

Tax returns: To show average annual income
Invoices and contracts: Proof of scheduled work you were unable to complete
Business records: Financial statements indicating loss of income

Consulting with a financial expert or attorney can help accurately calculate lost income if you’re self-employed.

What Is Diminished Earning Capacity?

Diminished earning capacity refers to a reduction in your ability to earn income in the future due to long-term or permanent injuries. Unlike lost wages, which cover past income loss, diminished earning capacity looks forward and considers how your injuries will affect your future employment opportunities and income.

Calculating Diminished Earning Capacity

Calculating diminished earning capacity involves several factors:

Pre-injury earnings: Your income level before the accident
Post-injury earnings potential: Your ability to earn income after the injury
Age and life expectancy: Younger individuals may face more significant losses over time
Education and skills: Your qualifications and whether they are still applicable
Job market conditions: Availability of suitable employment opportunities
Work restrictions: Limitations on the type of work or hours you can perform

An economist or vocational expert may be needed to calculate the projected loss accurately.

How a Lawyer Can Help With Your Lost Wages Claim

Navigating the process of claiming lost wages and diminished earning capacity can be challenging. Insurance companies may try to minimize your claim or dispute the calculations.

An experienced personal injury attorney can:

Gather necessary evidence: Assist in collecting documentation to support your claim
Accurately calculate losses: Ensure all forms of lost income are included
Negotiate with insurers: Advocate on your behalf to seek fair compensation
Provide expert resources: Connect you with financial or vocational experts if needed

Most attorneys offer free consultations to review your case.

Contact a Personal Injury Attorney for Help Recovering Lost Wages

Understanding how lost wages are calculated is crucial in a personal injury case. By knowing what is included, the supporting evidence required, and how they are calculated, you can work toward recovering as much money as possible for your injuries and losses.

Remember, seeking professional legal assistance can help protect your rights and ensure you receive the compensation you deserve for both your past and future losses.

Contact Our Gainesville Personal Injury Law Firm at Allen Law Accident & Injury Lawyers in North Central Florida

If you need legal assistance, contact the Gainesville personal injury lawyers at Allen Law Accident & Injury Lawyers at your nearest location to schedule a free consultation today, we’re open 24 hours daily.

We have three convenient locations in Marion County and Alachua County, North Central Florida:

Allen Law Accident & Injury Lawyers – Gainesville Office
2550 SW 76th St #150
Gainesville, FL 32608
(877) 255-3652

Allen Law Accident & Injury Lawyers – Downtown Gainesville
621 W University Ave
Gainesville, FL 32601
(866) 928-6292

Allen Law Accident & Injury Lawyers – Ocala Office
112 S Pine Ave
Ocala, FL 34471
(352) 351-3258