In California, lost earning capacity is a measure of damages that compensates an injured party for the loss of their ability to earn income in the future as a result of an accident or injury. Here’s an explanation of how lost earning capacity is assessed and awarded in California:
- Definition: Lost earning capacity refers to the impairment or reduction in an individual’s ability to earn income due to the injuries sustained in an accident. Unlike lost wages, which compensate for income already lost as a result of missed work, lost earning capacity compensates for the future loss of income opportunities.
- Calculating Lost Earning Capacity: Assessing lost earning capacity involves estimating the difference between the injured party’s projected earning capacity before the accident and their reduced earning capacity as a result of the injuries. This calculation typically considers factors such as the individual’s age, occupation, education, skillset, work history, earning potential, and the extent of their injuries.
- Expert Testimony: In many cases, determining the extent of lost earning capacity requires expert testimony from vocational rehabilitation specialists, economists, or other qualified professionals. These experts evaluate the injured party’s vocational abilities, potential for retraining or job accommodations, and the impact of their injuries on their future employment prospects.
- Future Losses: Lost earning capacity compensation aims to provide financial support for the injured party’s future economic losses resulting from their diminished earning ability. This may include lost wages, salary, bonuses, promotions, career advancements, and other income-related benefits that the individual would have reasonably expected to earn over their remaining working years.
- Present Value: When awarding damages for lost earning capacity, courts typically calculate the present value of the future income losses, taking into account factors such as inflation, interest rates, and the time value of money. This ensures that the awarded damages accurately reflect the economic value of the future income stream.
- Evidence and Documentation: To support a claim for lost earning capacity, the injured party must provide evidence and documentation demonstrating the extent of their injuries, the impact on their ability to work and earn income, and the likelihood of future economic losses. This may include medical records, vocational assessments, employment history, tax returns, and expert reports.
- Non-Economic Factors: In addition to the quantifiable economic losses, courts may also consider non-economic factors such as pain and suffering, emotional distress, and loss of enjoyment of life when awarding damages for lost earning capacity.
In summary, lost earning capacity is a significant component of damages in personal injury cases in California, aimed at compensating injured parties for the long-term economic impact of their injuries on their ability to earn income and support themselves financially.