How Are Lost Wages Calculated?

Almost everyone knows that you are entitled to reimbursement for your medical bills when you are injured due to someone else’s misconduct. Not everyone realizes that you might also qualify for compensation for lost wages. Lost wages are a form of economic damages. This article will fill you in on everything you need to know relating to calculating a lost wages claim.

Components of a Lost Wages Claim

Most of the time, you need to add up four components of a lost wages claim to arrive at total lost wages. These four components are: 

  • Wages you lost during the time you spent in the hospital;
  • Wages you lost while you stayed home recuperating;
  • Wages you lost for doctor’s appointments and other medical treatment; and
  • Vacation time and sick leave that you used up during your recovery period. 

The amount you claim for vacation time should equal the amount you would have earned if you had worked that day. You are entitled to reimbursement because once you use vacation time and sick leave, these off days are no longer available to you.

Calculating Lost Wages If You Are on an Annual Salary

If you are an employee paid an annual salary, the general way of calculating lost wages is:

  1. Reduce your annual salary to an hourly wage by dividing your annual salary by 2,080 (the number of annual work hours in a year of full-time work) to arrive at your hourly wage (assuming a 40-hour work week). Multiply by the number of hours of work missed after including all four of the above-listed components.
  2. Add in overtime payments you missed, lost salary increases, lost sales commissions, and lost bonuses (if any) during the time you missed work.

You might need your employer’s help to document these losses. This is also essentially how you will calculate your lost wages if you are self-employed.

Documents You Might Use To Prove Lost Wages

Use the following documents to prove lost wages:

  1. Tax returns for the past three years;
  2. Pay stubs;
  3. Business records such as income statements and balance sheets; and
  4. Email correspondence with clients if you are self-employed.

You will probably need other documents as well. Speak to your lawyer about what you need under the particular facts of your case.

Lost Earning Capacity

The term “lost earning capacity” refers to the economic effect of a long-term or permanent injury. You might even suffer a catastrophic injury that will keep you from ever working again. The amount of your total compensation depends on several factors, including: 

  • Your profession;
  • Where you worked;
  • Your education;
  • Your work history;
  • Your abilities;
  • Current market wage rates; and
  • Any history of promotions and raises.

If your disability is permanent, you will need to calculate your total lost wages from the date of the accident until the date that you would have retired had there been no accident.

Expert Witness Testimony

Expert Witness Testimony

The math can get fearsome if you need to calculate your lost wages decades in advance. Don’t try this yourself because even your lawyer might not be able to accurately calculate your compensation. You might need an expert to study your case, estimate your lost wages, issue a written report, and (if you go to trial) testify in court on your behalf.

Do not skimp on calculating your future lost earnings. If you underestimate them (which is very easy to do) or try to claim them without sufficient evidence backing you up, you could run out of money years or even decades down the road. If that happens, you will be out of luck.  

Limitations on Your Claim

Limitations on Your Claim

Your lost wages claim and your compensation might be subject to inherent limitations. A description of some of the most common limitations appears below.

Pre-Existing Injury

If your medical history shows that you previously suffered the same kind of injury (a back injury, for example) that you are complaining about now, the defendant might argue that the accident did not cause your back injury and that you are simply suffering from a flareup of an old injury. If successful, this defense might completely defeat your claim.

Insurance Policy Limitations

With the exception of a bad faith insurance claim, no insurance company ever has the obligation to pay you any more than the maximum limits stated in the policy. To the extent that you are depending on an insurance company to pay your claim, this represents an ultimate limitation.

Comparative Fault

Missouri applies a “pure comparative fault” system to personal injury claims where both parties were at fault. Under this system, a Missouri court will assign you a percentage of fault and deduct that percentage from your total compensation, including lost wages. If you were 25% at fault, for instance, the court will deduct 25% from your total compensation.

Workers’ Compensation Claims

Workers’ compensation applies to work-related injuries. They are a special case, with different rules than the rules that apply to an ordinary personal injury claim. For example, there is no comparative fault under almost all circumstances because workers’ compensation is a no-fault system.

Workers’ compensation law also limits your compensation. You are entitled to only two-thirds of your lost wages, subject to a minimum weekly payment of $40 and a maximum payment of 105% of the Missouri state average wage.  

The foregoing assumes total disability. If you are only partially disabled (you are able to work part-time), your lost earnings reimbursement will be less than it would have been if you had been unable to work at all.

Trial vs. Settlement

Trial vs. Settlement

Over 90% of all personal injury claims never make it to trial. Some defendants may settle after a few weeks of negotiations. Other, more stubborn defendants will wait until you file a lawsuit before they will issue a serious settlement offer. No matter what, however, all bargaining takes place in the shadow of the law. 

This means that the defendant will normally refuse to agree to a dime more than they think you would win at trial. In rare cases, a defendant will offer more just to avoid bad publicity. Most of the time, however, you must prove your case to the defendant with admissible evidence before you can reach a settlement. 

You Probably Need a St. Louis Personal Injury Lawyer

You might not need a lawyer for a small claim. However, if your claim is large, you almost certainly need a St. Louis personal injury lawyer. You may “win” without a lawyer, but how much will you win? With a skilled lawyer, you are likely to win far more than enough to pay your legal fees.

Contact Schultz & Myers Personal Injury Lawyers for a free consultation today. Call us at (314) 444 4444.