Lost Earning Capacity Vs. Lost Wages in Injury Claims: What’s the Difference?

As personal injury lawyers serving Alberta, we know an injury or illness can result in serious financial consequences to you and your family. Medical problems could force you to stop working, either temporarily or permanently. Even if you eventually recover enough to work again, it is possible that you will not be able to perform some of your previous duties or your previous hours.

In these situations, you may need to rely on your long-term disability (LTD) insurance to make ends meet. Such coverage, if available to you, is usually included as part of an employer-paid group plan or privately purchased individual policy. LTD insurance replaces a portion of your past earnings in case of disability, defined for insurance purposes as the inability to work, typically 50% to 70%.

As part of your claim for damages, your Calgary personal injury lawyer can claim lost wages and lost earning capacity against an insurance company. This is a claim for lost income because of someone’s negligence. This is different than LTD benefits or other ongoing benefits such as CPP disability or Employment Insurance benefits.

Read on to learn more about the difference between lost earning capacity and lost wages and how they relate to long-term disability claims.

Lost Wages Vs. Lost Earning Capacity: Definitions

When you are disabled due to injury or illness, you may be entitled to compensation for lost wages and lost earning capacity. What’s the difference between these two concepts?

Lost wages refer to the actual income you have lost as a result of your injury or other medical condition. This can include your regular salary, bonuses, or other forms of compensation, as well as scheduled pay raises.

Lost earning capacity, on the other hand, refers to your potential to earn income in the future. This can be affected by your injury or other disabling medical issue and may impact your ability to work in your current profession or pursue other career opportunities.

Lost wages are a backward-looking concept, intended to make up for real losses as measured by your income up to the point of your disability. Lost earning capacity is a forward-looking concept. As such, it still accounts for your past income but also considers factors that would likely have increased your earnings such as, for example, additional training or schooling that was interrupted, job postings you had applied to, and the probability of being promoted at your previous workplace. This earning potential is then measured against the probability of adverse events (like being laid off) affecting your hypothetical, disability-free working life and your real earning capacity since you became disabled.

Proving Long-Term Earning Potential Has Been Impacted

Depending on factors such as your age, pre-existing health, previous work experience, and the seriousness of your injury or illness, your future earning capacity could make up the lion’s share of income-related losses in your long-term disability case.

To prove that your long-term earning potential has been impacted, you’ll need to provide evidence of your pre-injury earning capacity as well as the impact of your injury or disability on your ability to work.

This evidence can include (but is not limited to) medical records, tax records, employment history, documentation of education and training, and testimony from experts such as vocational and rehabilitation specialists or economists. These experts assess what kinds of work was available to you previously, what kinds of work you could have performed in the future if you had not been disabled, and what kinds of work you are actually capable of doing post-disability. They can also speak to the earnings you would reasonably receive in each scenario.

Insurers may also call on their own experts to provide responding opinions on your future earning capacity. As you can guess, fairly evaluating future lost earning capacity requires medical, employment, and expert evidence.

Every claim is different, with its own set of facts, and past results do not indicate future outcomes. That said, our Calgary injury lawyers have significant experience working with proving future loss of earning capacity using all tools available to them.

Types of Compensation Available in Each Case

A claim for personal injury is meant to put an injured person back in the place they would have been in, had the accident not occurred. While you cannot undo an accident, civil law recognizes monetary compensation as being the next best thing.

You may be able to claim for pain and suffering, lost wages, future loss of earning capacity, future care costs, loss of housekeeping capacity, out-of-pocket expenses, and loss of interdependency. It is possible to claim for lost pension and benefits in addition to your lost income.

Our team of lawyers can help you understand the types of damages available in your case and make the at-fault insurance company compensate you for your losses.

Call Us If You Have Been Injured in an Accident

Understanding the difference between lost wages and lost earning capacity can help you better understand your legal rights. The question is not how much you were earning before the accident versus after. The question is how much you would have earned had the accident not occurred – now and in the future.

Our lawyers can provide you with legal advice tailored to your situation at a free initial consultation. Please call us any time at 1-888-494-7191 to set up an appointment or visit us at our downtown Calgary office.