How do I calculate my lost wages and future loss of earning capacity for a California personal injury claim?
To calculate past lost wages, you must document the exact income you missed. To calculate future loss of earning capacity, you must project how your injuries will reduce your ability to earn money over your lifetime, which often requires expert analysis.
Here are the steps to calculate these damages for a California personal injury claim:
Step 1: Calculate Your Past Lost Wages
Gather proof of your income before the injury, including at least three months of pay stubs, your most recent W-2 form, and the prior two years of tax returns. Ask your employer for a letter that states your job title, pay rate, and the specific dates and hours you missed from work due to your injury. Total the wages lost. Include any sick pay, vacation time, or other benefits you were forced to use.
Step 2: Document Your Medical Impairment
Obtain a detailed medical report from your treating physician that clearly outlines your injuries, diagnosis, and prognosis. The report must state any physical or mental limitations that affect your ability to perform your job duties. If your doctor declares your condition "Permanent and Stationary," this report becomes critical evidence for determining long-term work restrictions.
Step 3: Assess Your Future Earning Capacity
This step calculates the loss of your ability to earn, not just a specific job's wages. It considers your age, life expectancy, skills, education, and pre-injury career path. For significant injuries, you will likely need a vocational expert to evaluate your work restrictions and testify on what types of jobs you can no longer perform and the corresponding reduction in your earning power.
Step 4: Reduce Future Losses to Present Cash Value
California law requires that any award for future lost earnings be reduced to its "present cash value." This is the lump sum of money that, if reasonably invested today, would compensate you for your future losses. This calculation is complex and almost always requires an economist to analyze interest rates and inflation to provide an expert opinion.
Important considerations:
Past lost wages are for a specific, provable amount of money you have already lost. Future loss of earning capacity is a projection of the harm to your ability to earn money in the future, even if you are currently employed. For self-employed individuals, use tax returns, 1099s, and profit and loss statements to establish your earnings.
Note:
Insurance companies heavily scrutinize and often dispute claims for future loss of earning capacity. Attempting to calculate this without professional help is extremely difficult and may result in a significantly lower settlement or verdict.
This is general information and does not constitute legal advice. For complex situations, consult with a qualified California attorney.
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Disclaimer:
This information is for general guidance only and should not be considered as legal advice. Please consult with a qualified attorney for specific legal matters.
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Updated: August 17, 2025
Personal Injury
Accident claims, medical malpractice, and compensation rights
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