When you’re injured in an accident, it’s not just the physical pain and medical bills that affect you—being unable to work can also have a big financial impact. If your injury keeps you from earning a paycheck, you may be entitled to recover lost wages as part of a personal injury claim. This guide will explain what lost wages are, how they’re calculated, and what you need to prove your claim.
What Are Lost Wages?
Lost wages are the income you missed out on because of an injury that prevents you from working. These wages can include your regular paycheck, overtime, bonuses, and commissions. Whether you’re out of work for a few days or longer, lost wages are an important part of your injury compensation. After all, when a car accident or work injury happens because of someone else’s negligence, you shouldn’t have to suffer financially.
Types of Lost Wages in Personal Injury Claims
There are a few different types of lost wages you can claim in a personal injury case:
- Actual Lost Wages: These are the wages you would have earned if you hadn’t been injured. It includes your regular income, overtime, commissions, and bonuses.
- Future Lost Wages: If your injury affects your ability to work long-term or permanently, you may also be able to claim future lost wages. This is sometimes called a loss of earning capacity.
- Self-Employed and Gig Workers: If you work for yourself or are part of the gig economy, calculating lost wages can be more complicated. However, you can still recover what you would have earned during your time away from work.
These lost wages are crucial in helping you stay financially stable after an injury. Now, let’s look at how to calculate them.
How to Calculate Lost Wages
The way you calculate your lost wages depends on the type of job you have. Here are the most common methods:
Salaried Employees
If you’re a salaried employee, calculating lost wages is straightforward. You simply take your annual salary and divide it by the number of days in a year (365). Then, multiply that daily rate by the number of workdays you missed.
Example:
If you make $50,000 a year and missed 10 workdays, your calculation would look like this:
- $50,000 ÷ 365 = $137 per day
- $137 x 10 days = $1,370 in lost wages
Hourly Employees
If you’re paid by the hour, you’ll need to multiply your hourly wage by the number of hours you were scheduled to work but couldn’t because of your injury.
Example:
If you make $15 an hour and usually work 40 hours per week, but missed two weeks due to your injury, your calculation would look like this:
- $15 x 40 hours = $600 per week
- $600 x 2 weeks = $1,200 in lost wages
Self-Employed or Gig Workers
If you’re self-employed or work in the gig economy, calculating lost wages can be more complicated. You’ll need to provide evidence of your typical income, such as tax returns, invoices, and contracts.
Example:
If you typically earn $4,000 per month, but missed a month of work, you could claim $4,000 as lost wages. However, the key is having solid documentation of your earnings.
Loss of Earning Capacity (Future Lost Wages)
For people who can’t return to work or must take a lower-paying job due to their injury, there is an additional claim for future lost wages. Calculating future lost wages often requires experts, such as vocational specialists or economists, to assess how much your injury will impact your ability to earn in the future.
Documentation Needed to Prove Lost Wages
To successfully claim lost wages, you need the right documentation. Without proper proof, it can be harder to win your case. Here are the most common documents you’ll need:
- Pay Stubs: Show recent pay stubs to prove how much you typically earn.
- Wage Statements: Get a letter from your employer that confirms your hourly wage or salary and how many days you missed due to the injury.
- Tax Returns: If you’re self-employed, your tax returns can show your average monthly or yearly income.
- Doctor’s Notes: Medical records or a note from your doctor should clearly state how long you were unable to work due to your injury.
- Employer Verification Letter: Have your employer confirm the dates you were off work and your regular income details.
Keeping track of all this information will strengthen your case and help ensure that you’re properly compensated.
State Laws on Lost Wages
Every state has different rules about personal injury claims, and Texas is no exception. The good news for Texas residents is that the state does not have income tax, so you won’t owe state taxes on your lost wages recovery. However, you may still have to pay federal taxes, depending on the details of your settlement.
Texas courts generally allow compensation for both actual lost wages and future lost wages, which means you can be compensated for the time you’ve already missed and for income you’ll lose in the future if your injury affects your long-term earning potential.
Impact of Disability and Other Benefits on Lost Wages
If you’ve received disability benefits, such as short-term or long-term disability, while you were out of work, this may impact your lost wage claim. In some cases, the amount you receive in disability benefits might reduce your personal injury settlement. This is known as an offset.
Similarly, if you’ve been receiving workers’ compensation, your lost wage calculation might be different, since workers’ comp provides partial wage replacement. Always consult with your lawyer about how benefits may affect your claim.
Common Challenges and Mistakes in Recovering Lost Wages
Unfortunately, some people make mistakes when trying to recover lost wages. Here are a few common challenges to watch out for:
- Failing to include bonuses, commissions, or overtime: Make sure to include all sources of income, not just your base salary or hourly wage.
- Not calculating future losses: If your injury is long-term, don’t forget to factor in the impact on your future earnings.
- Lack of proper documentation: Failing to provide sufficient proof of lost wages can weaken your claim.
How Lost Wages Are Factored Into Personal Injury Settlements
Lost wages are a key part of personal injury settlements. Insurance companies will often try to minimize the amount they pay, so it’s important to provide clear evidence of the wages you’ve lost. Your lawyer will use this information to negotiate with the insurance company or, if necessary, present it to the court.
Having a strong claim for lost wages can significantly impact the overall value of your settlement, so it’s crucial to get the numbers right.
Conclusion
Lost wages are an essential part of any personal injury claim, and it’s important to know how to calculate and document them properly. Whether you’re a salaried employee, hourly worker, or self-employed, being unable to work due to an injury can have a big financial impact. By gathering the right documentation and consulting with a personal injury lawyer, you can make sure you recover the wages you lost and receive fair compensation for your injuries.
If you’re dealing with an injury and need help recovering your lost wages, reach out to a local personal injury attorney for guidance.