Loss of Earnings/Diminished Earning Capacity

When you suffer a personal injury because of someone else’s misdeed, Illinois law entitles you to monetary compensation equal to the amount you lost. If you had to miss work because of your injury, that could add up to an astronomical sum if you are out of work over the long term. It is critical that you understand how to effectively demand compensation for your losses.

What Are Personal Injury Damages?

What Are Personal Injury Damages?

Your personal injury claim might be worth a lot more than you think.

Under Illinois law, if your claim is valid, you may qualify for the following types of damages:

The point is that loss of earnings and diminished earning capacity are only two of many possible components of damages in a personal injury claim.  

Loss of Earnings

‘Loss of earnings’ refers to the amount of earnings that you lose by the time you file your personal injury claim, plus estimated future lost earnings. 

Wage Earners

Determining loss of earnings for wage earners is fairly straightforward. Calculate the number of days or work you missed and multiply it by the number of hours you work a day. Take into account average overtime if you frequently work overtime.

Salaried Employees

Take your monthly salary and divide it by the number of days you work per month to get a daily wage. Then, multiply your daily wage by the number of days of work you missed.

Commission Earners

Calculate your average daily commission. You might even go back as far as a year to determine your commission income. Divide by 365 and multiply by the number of days of work you missed.

Self-Employed and Entrepreneurs

If you are an entrepreneur without a stable income, determining loss of income can get challenging. 

You might need: 

  • Tax returns;
  • Invoices;
  • Contracts;
  • Business growth projections;
  • Other documentation

The entire process of determining your lost earnings is complex, but an experienced personal injury lawyer can help. You might even need help from an expert witness

Sick Leave and Vacation Time

If you used up sick leave and/or vacation time due to your injury, you could count it as missed work. The reason why is that paid leave is a financial resource that you consume every time you use it. 

Diminished Earning Capacity

Calculating diminished earning capacity involves considering a broader and potentially more long-term impact on your earning potential. 

Diminished earning capacity acknowledges that your injury might:

  • Prevent you from returning to your previous job;
  • Limit your ability to advance in your field;
  • Force you to take a lower-paying job; or
  • Retire early.

The amount you claim for diminished earning capacity, then, is far more speculative than the amount you might claim for lost earnings.  

Factors That Determine Your Compensation for Diminished Earning Capacity

The most important factors in determining your diminished earning capacity include:

  • Your age (to estimate your remaining working lifetime);
  • Your income before the accident;
  • Your education;
  • Your income history; 
  • Your talents, skills, and expertise

You may need testimony from economics experts, vocational experts, and medical experts. Nevertheless, it is absolutely critical that you ask for enough money and back up your demand with strong evidence. If you run out of money decades down the road, it will be too late to come back and ask for more money.

Diminished Earning Capacity Versus Future Lost Earnings

There is a subtle distinction between diminished earning capacity and future lost earnings. Of course, you might suppose that diminished earning capacity is nothing more than estimated future lost earnings. This is not quite the truth, however. 

Suppose your injury requires you to miss work for a specific period of time in the future (e.g., for surgery or rehabilitation). In that case, the income you would have earned during that time represents your future lost earnings, not your diminished earning capacity. Future lost earnings are a lot easier to calculate than diminished earning capacity.

Special Case: Workers’ Compensation

Workers’ compensation typically applies if your injury was work-related. If it applies, it replaces the entire personal injury system of compensation. You cannot seek non-economic damages such as pain and suffering, you cannot seek punitive damages, and you cannot even seek 100% of your lost income. 

On the bright side, workers’ compensation is almost always no-fault, meaning that you don’t have to prove your employer was at fault to win.

Another ray of hope is that if you can find a third-party defendant (not your employer), you can file a lawsuit and seek full personal injury damages.

A Personal Injury Lawyer Can Help With Your Loss of Earnings/Diminished Earning Capacity Claim

Loss of earnings, and especially diminished earning capacity, are difficult to calculate and prove on your own. An experienced Chicago personal injury lawyer, however, should have plenty of experience in such matters. They should also enjoy strong professional relationships with expert witnesses who can help you prove your claim. Contact our Law firm at Zayed Law Offices Personal Injury Lawyers, you can call us at (312) 726-1616.