Calculating Lost Wages in Personal Injury Cases and Why they are Important
When a person is injured in an accident that was caused by someone else’s negligence, they are legally entitled to seek monetary compensation from the liable party’s insurance company. In many cases, claimants pursue lost wages in addition to medical bills, property damage, and lost earnings potential. Compensation can be divided into two categories: non-economic damages and economic damages.
Non-economic damages are intangible, unquantifiable costs such as pain and suffering or loss of enjoyment.
Economic damages are expenses resulting from your injuries that can be calculated and given a set numerical value. An example of this would include lost wages.
It is important to know how lost wages are calculated in a personal injury settlement in order to be your own best advocate and be discerning when you are considering attorneys to represent you.
Lost wages refers to the money you would have earned at work had you not been injured in the accident. You are entitled to reimbursement of lost wages no matter what type of employee you are: full-time employee, part-time employee, have regular or occasional employment, make an hourly wage or weekly wage or monthly salary. Lost wages can also include overtime pay, the value of sick days and vacation days, bonuses, and tips.
In order to prove lost wages, your employee must provide proof in the form of a Wage Verification Form. Other methods of obtaining wage information can include pay stubs, bank statements, and tax returns. Your personal injury attorney will assist you in gathering the appropriate documentation based on your individual claim.
Lost Wages vs. Lost Earning Potential:
While lost wages are the amount that you would have earned if you had not been injured in the accident, lost earning potential refers to long-term injuries; the amount that you may have earned in the future if it hadn’t been for the injuries you received in the accident. Long-term injuries can hinder your opportunity for raises, new career paths, and bonus potentials. These damages can be recovered if you are able to prove that your ability to earn money in the future has been damaged or negated entirely by your injuries. Calculating lost earning potential is more difficult than calculating lost wages, and your personal injury attorney will help you through the entire process.
How to Calculate Lost Wages:
If you make an hourly wage-
Take the amount you make per hour and multiply it by the number of hours you missed because of the accident and your injuries and that number will be your lost wages.
You make $25/ hour. You missed 7 days of work (7 days X 8 hours = 56 hours missed) due to the accident. Since you made $25 per hour, you have $1,400 ($25 X 56 hours missed) in lost wages.
If you are a salaried employee-
Take your yearly salary and divide it by 2080 (the number of weekday work hours in a year) and then multiply it by the number of hours you missed due to your injuries.
You make $40,000 per year in salary. You missed 5 days of work (5 days X 8 hours = 40 hours missed). Since you work the standard 2080 hours per year, you make $19.23 ($40,000 / 2080) in hourly wages. Your lost wages are $769.23 ($19.21 X 40 hours missed).
If you are self-employed-
Although it is difficult to calculate lost earnings if you are self-employed, there are still ways to verify these earnings by providing income tax returns that show income, business records that show the amount of revenue, and expenses and other statements that demonstrate this information.
If you have been injured in an accident and need compensation, contact Ryan Holloway & Miller. We are here to help calculate your lost wages and get you fully reimbursed. Call us today at (406) 542-2233.