Loss of Earning Capacity

Injuries will often result in permanent disabilities and work restrictions. For example, individuals with neck or back injuries are often placed on weight lifting restrictions, which can limit their employment opportunities. The law recognizes that a person’s inability to work in a given field is a compensable harm, which is called a “loss of earning capacity.” This is not the same as an award for loss of past earnings, but is based upon the person’s limited “capacity” to earn money in a chosen field of work. Compensation may be based on what a person could have earned even if he or she never took advantage of that capacity. For example, a person may have the skills to be a concert pianist, but merely worked as a piano teacher. If the person lost multiple fingers in an accident, then they can no longer perform as a concert pianist, even those they never worked in this particular field. The law recognizes that the injury deprived he or she of a “capacity” to work in a given field even though the individual never profited from it monetarily.

In determining loss of earning capacity, a plaintiff’s earnings before and after the injury does not necessarily constitute the measure of loss. Even if the plaintiff had been unemployed at the time of the injury, he or she is entitled to an award for impairment or diminution of earning power due to injury related restrictions and limitations caused by the fault of another. And while a person’s earnings at the time of the injury is relevant, their present earnings are not necessarily determinative of the individual’s future ability to earn more money. Damage awards should be based on the injured person's ability to earn money prior to the accident, rather than what he actually earned before the injury.

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