Valuing Loss of Earning Capacity In A Legal Dispute

December 16, 2016 at 11:10 pm

Loss of earning capacity can be defined as an ongoing loss of the ability to perform your job at all, or as well as you did before the accident.


For example, if you are a construction worker and you sustain a permanent injury that affects your ability to lift objects more than 20 pounds, your ability to perform the tasks of a construction worker will obviously have been reduced. Or, suppose you are a teacher and are unable to either sit or stand for more than 15 minutes without extreme pain. This will negatively affect your ability to be employed as a teacher in the future.


It may be that your work abilities have been reduced by a percentage, or it may be that you are totally disabled from a vocational standpoint, meaning there is no job that you can reasonably perform given your injuries. But ultimately, loss of earning capacity is only an issue if you have future or permanent injuries that will affect your ability to work.

How to Be Compensated For Loss of Earning Capacity

The best way to receive compensation for loss of earning capacity is to hire an expert to assess your loss and present his or her findings to a jury. A vocational expert may be consulted to evaluate your job skills as well as your medical information and provide an opinion as to how much your ability to perform your work has been affected by your injury.


If your doctor reports that you are completely disabled and unable to do any work, the vocational expert need only support the doctor’s opinions and indicate that there are no jobs available for you with your limitations. In other words, you are totally disabled from a work standpoint and have suffered a 100 percent loss of earning capacity.


The expert will need to know exactly what physical and mental limitations you have from a medical perspective and to what extent they physically limit you. This will be based on opinions from doctors in medical reports and records, as well as, an interview where the expert asks you a series of questions regarding what you can and cannot do. For example, the expert might ask how long you can sit or stand without discomfort, how much weight you can lift, or how often you get headaches.

Functional Capacity Evaluation Explained

The truthfulness of your answers will be scrutinized by a jury, so the vocational expert may use what is called a functional capacity evaluation (FCE) to support your claims. A functional capacity evaluation is usually conducted by a physical therapist, but might also be conducted by a physician. The evaluation consists primarily of taking measurements of your ability to function physically. This might include testing things such as:


  • How much weight you can lift
  • How long you can sit comfortably
  • How long you can stand comfortably
  • How far you can walk without experiencing pain
  • How far you can bend or flex various parts of your body
  • How long you can function in certain situations without pain medication and other related evaluations.


These tests are used to determine the extent to which you are vocationally disabled and thus the extent of your loss of earning capacity by comparing how much your abilities have been reduced or lost in comparison to:


  1. Your previous level of function
  2. The average person of your age
  3. The average person of your vocation


The information from the vocational expert is then given to an economist or accountant who uses economic data and statistics to determine how much money you will lose in the future because of your reduced ability to work. If your abilities are expected to be reduced for a certain number of years, then the calculations are done for that number of years. If your reduction is believed to be permanent, then the calculations will be made using the date that you planned to retire or, if that cannot be proven, the average retirement age according to government statistics. Finally, these numbers will be reduced and presented to the jury in their present value.

How Juries look at Loss of Earning Capacity

Some lawyers argue that jurors are more receptive to lost wages and loss of earning capacity claims when you have tried to go back to work and couldn’t perform the tasks necessary to fulfill your duties. This may be because if  you testify during cross-examination that you are able to do the grocery shopping, take the kids to soccer practice, go on vacation, do the laundry and dishes and so forth, it will be very tough for a jury to believe that you cannot work.


On the other hand, the juries realize that working at a vocation is often much different than slowly and carefully doing housework. So if you can explain that you are able to do chores by doing them a little bit at a time or very slowly, but when you tried to go back to work you could not keep up without serious pain, a jury will be more likely to believe that you truly cannot work and are not simply trying to exploit the lawsuit.

Don’t Go It Alone

Unfortunately, calculating loss of earning capacity is a very complicated and a time-consuming. You need an experienced compensation lawyer who can ensure that you get a fair settlement. If you have been injured in an accident, do not rely on the insurance company. Instead, contact a qualified and experienced personal injury attorney to make sure you receive the compensation you are entitled to.