How are Lost Wages Calculated in a Car Accident Claim

Car Accident |April 04th, 2021

Over 3 million people are injured in car accidents each year in the United States. The average total number of days missed due to those injuries is over 11. Unfortunately, missing 11 days can cripple your finances. According to the latest research, 63 percent of Americans are living paycheck-to-paycheck. Luckily, you may be able to recover those lost wages. In many car accident cases, claimants pursue lost wages in addition to medical bills, property damage, and lost earnings potential. Here’s everything you need to know about how lost wages are calculated in car accident claims.

What Are “Lost Wages”?

Lost wages refer to money you could have earned if your car accident injuries didn’t prevent you from working. Typically, the term lost wages only refers to the money you could have earned from the point-of-injury until you are compensated — either through a verdict or out-of-court settlement. These lost wages come in a variety of forms. You may have missed work hours due to medical issues or a lengthy hospital stay. Your injury may have forced you to stay home and miss hours. Or you may have a mental health crisis stemming from the accident (e.g., PTSD, anxiety, depression, etc.) that is causing you to miss work.

In many cases, car accident injury victims can recover these wages from the party responsible for the accident or via an insurance claim. Lost wages refer only to compensation from missed work hours. Your car accident claim may include additional costs, such as hospital bills, lost compensation (which includes lost benefits, raises, etc.), and lost earning potential.

Calculating Lost Wages for the Employed

The calculation for lost wages is straightforward. If you are hourly, calculate the number of hours you missed and multiply it by your hourly wage. For example, you were recently injured in an accident and missed three days of work due to a hospital stay. You make $28 per hour. In total, you missed 24 hours of work (3 days x 8 hours). Since you make $28 per hour, you have $672 ($28 x 24 hours) in lost wages.

For salaried workers, the equation is similar. Take your yearly salary and divide it by the number of workday hours you work each year (usually 2080). You then take this number — which is your hourly pay — and multiply it by the number of missed hours. For example, you were recently injured in a car accident and forced to stay at home for 5 days to rest — missing 80 (5 x 8) hours of work. You make $55,000 per year in salary. Since you work the standard 2080 hours per year, you make $26.40 in hourly wages. Your lost wages are $1,056 ($26.40 x 40 hours).

Note: Taking sick leave or vacation days is irrelevant to calculating lost wages. You were forced to use those days, and you should still receive compensation whether you took sick days or not.

Lost wages are proven in multiple ways. For starters, you should gather documentation from your employer. This includes a Wage Verification Form. In this statement, your employer will calculate the amount of income you have lost due to the injury. In addition to this letter, previous pay stubs or tax returns can substantiate your claim. Finally, you can leverage medical records and hospital receipts to showcase how long you were in the hospital and how long you were required to rest at home.

Calculating Lost Wages for the Self-Employed

Proving lost wages as a self-employed person is more difficult. Depending on your situation, time away from work may include lost clients and opportunities. So, these tangible and intangible costs should be considered. Since you act as your own boss, any salary you pay yourself likely represents a small portion of your total lost earnings — since many small business owners have complex salary structures to help keep the business afloat.

If you’re self-employed, it’s crucial to pick an experienced and driven accident attorney. The pure complexity of proving lost wages aside, the opposing party may claim that lost income was due to external, non-injury-related factors. And the process of arguing this can get complicated, messy, and document-drenched. So, it’s important to hire an attorney familiar with those types of accident cases.

Understanding Lost Earning Potential

Injuries related to car accidents have the potential to change your life completely. Of the 6 million car accidents each year, around 2 million cause serious, long-term injuries. After you’ve taken lost wages, hospital bills, and property damage into account, there are still significant costs associated with lost earning potential. What raises, new career paths, and bonuses could you have experienced if you weren’t seriously injured? Unlike lost wages, which only account for losses during the period between the injury and settlement, lost earning potential accounts for future earnings.

Important: Calculating lost earning potential is more difficult than lost wages. Expert witnesses like health practitioners and forensic analysts may be called to testify regarding those potential figures. And your personal injury lawyer will likely sit down and help you understand the scope of these earnings.

Do You Qualify for Workers’ Compensation or Disability?

If a car accident left you with a disability, you might qualify for workers’ compensation insurance and/or Social Security Disability Insurance (SSDI). Over 8 million Americans currently receive SSDI payments, which help provide income for those unable to work due to a disability. Unfortunately, SSDI does have some requirements:

• You must have a long-term disability. Short-term disabilities are not eligible for SSDI.

• You must have been in the workforce long enough (i.e., paid into social security taxes long enough) to qualify. Qualifying requires you to earn “credits,” which are accrued each year. For most people, the number of credits required is 40. The annual credit cap is 4. Thus, most individuals qualify after 10 years of working, but some young people may require fewer credits.

• Your condition must be listed under Social Security guidelines. If it is not, the Social Security Administration will decide whether your condition is considered permanent. Some conditions may not qualify.

Most employees are also legally required to have workers’ compensation insurance. If your accident happened on-the-clock, you might qualify for Temporary Total Disability Pay (TTD). In addition, your employer may provide private accident insurance.

Remember, workers’ compensation, private insurance, and SSDI may not be comprehensive enough to cover your damages. Get in touch with your car accident lawyer to discuss your case.

Get Help From a Car Accident Lawyer

Were you recently involved in a car accident? AKD specializes in car accident cases, and we may be able to help you find compensation for lost wages, lost earning potential, medical bills, mental health costs, and property damage. Car accidents can disrupt your life, destroy your financial health, and leave you feeling abandoned. Don’t hesitate to get in touch with a professional to discuss your case. Contact us online or at 504-200-0000 for a free consultation.