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What is the Difference Between Loss of Income and Loss of Earning Potential?

What is the Difference Between Loss of Income and Loss of Earning Potential?

If you suffer an injury in a workplace accident or another incident, you may qualify for workers’ comp benefits or personal injury compensation. If you missed work or otherwise lost earnings due to your injury, part of your compensation will consist of lost earning. New York law recognizes two types of lost earnings—loss of income  and loss of earning potential (diminished earning capacity).   So what’s the difference between these two forms of compensation? Loss of income looks to the past, while diminished earning capacity looks to the future. You calculate loss of income based on how much money you have already lost at the time you file your claim. You calculate loss of earning potential from the time you file your claim until you either fully recover or reach retirement age.

Loss of Income

You can generally seek assistance from your employer to calculate your loss of income. The simplest calculation is when you work regular hours for a set daily, weekly, or monthly wage. If that is your situation, all you need to do is collect your work records and do a little math to calculate your lost earnings. Have your employer issue a signed letter summarizing your lost earnings.

Sick Leave and Vacation Leave

Remember to include any sick leave and vacation leave that you used, even if your employer paid you for those days. By using them, you used a valuable resource. Count the value of one day’s worth of sick leave, for example, the same as one paid work day.

Commission Sales, Self-Employment, Etc .

If your income is variable because you work on a commission or are self-employed, calculating your lost income case gets more complex. Assemble your case for lost earnings based on your business records or even your tax returns. If you can calculate a monthly or weekly average, use that figure to help calculate your loss of income. Make your case compelling, rational, and well-documented. A little common sense will go a long way here.  

Loss of Earning Potential

If you expect your injuries to impact your work life in the future, you need to calculate the value of your future losses. If you expect the value of your claim to be high, you will probably need to hire an expert witness to perform the calculation for you.  Following are some of the factors the expert might take into account:

  • How much you were earning before your accident vs. how much you are earning now;
  • Your career trajectory. Were you a rising star, or were you trapped in a dead-end job?
  • How long is your disability expected to endure? A year? The rest of your life?
  • Your rehabilitation potential.

An expert will consider many other factors as well. The right expert should be worth far more than you pay them. 

Inherent Limitations

Consider the following limitations on the value of your claim:

  • Comparative negligence: Were you partly at fault for the accident?
  • Insurance policy limits. This limit could set a ceiling on any possible recovery.

Other obstacles may appear as well, depending on the specific facts of your case.   

An Injury Lawyer Can Help You Understand the Value of Your Claim

You should consider seeking the advice of a personal injury attorney on how to proceed with your claim for loss of income/lost earning potential. A lawyer might need to perform an investigation and complex calculations to estimate the true value of your claim.  Your lawyer can handle all aspects of your case, from establishing its value to seek compensation through insurance claims and injury lawsuits.

If you were injured in a workplace accident in Bronx, NY, and need legal help, contact our Bronx workers’ compensation attorneys at O’Connor Law PLLC to schedule a free case consultation today.

O’Connor Law PLLC

626 City Island Ave,

Bronx, NY 10464

(914) 595-4502

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