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How Are Lost Future Earnings Calculated?

on May 26, 2017 - Personal Injury

A man using a calculator.In a personal injury claim, the injury victim or plaintiff typically seeks compensation for various types of damages caused by the defendant’s negligence (e.g., medical expenses, pain and suffering, loss of income while injured). One of the most important categories of damages in these cases is lost future earnings (sometimes called lost future earning capacity).

Lost future earnings compensate the victim for difference between:

  • The future income the victim would have earned if the injury/accident had never happened; minus
  • The future income the victim reasonably expects to earn while being hampered, limited or otherwise affected by the injury.

For example, if the plaintiff is unable to return to work entirely or if the plaintiff’s injuries require the plaintiff to take a lower salary job or one that’s less rigorous or only part-time, the plaintiff has the right to seek restitution for the future lost income projected over the course of the plaintiff’s expected working years. Loss of future earnings represents the money that the plaintiff would have been reasonably capable of earning, but for the negligence of the defendant.

Factors Considered by Florida Law

Florida law requires that lost future earnings:

  • Be measured by a plaintiff’s diminished ability to earn an income in the future, not the plaintiff’s actual loss of future earnings.
  • Be directly related to the plaintiff’s injuries; and
  • Supported by evidence enabling them to be reasonably calculated.

Factors used to calculate lost future earning capacity include

  • Plaintiff’s age, health, occupation, education level, and work and earnings history.
  • The severity of the injury.
  • Whether any resulting disability is long term or permanent.
  • Income earned by the plaintiff since the injury/accident.
  • Plaintiff’s ability to compete in the labor market.

Other Relevant Facts

To accurately calculate damages for lost future earnings, an expert witness engaged by the plaintiff would also consider other facts, such as:

  • The likelihood of the plaintiff being promoted or progressing to higher compensated positions during his career.
  • Whether the plaintiff was likely to have disruptions or other transitional low-earning periods in his career.
  • The effect of the lost earnings on retirement accounts, pensions and other benefits (reductions in future benefits can support a claim for more damages).

Adjustments to the Award of Damages

Because any determination of lost future earnings relates to damages the plaintiff will suffer in the future, the amount the defendant actually pays at the conclusion of the case is reduced to present value. For example, if a court determines that the plaintiff will suffer $600,000 of lost earnings over the next 40 years, the defendant pays a smaller dollar amount today based upon a formula that assumes a rate of return on that amount over the next 40 years.

In addition, because future earnings are subject to income tax but most recoveries in personal injury suits are not taxable, the defendant’s payment for lost future earnings damages is reduced to the after tax portion of the future earnings.

The Orange Park personal injury lawyers at Ansbacher Law will work to maximize the compensation you receive for your claim. Call us 24/7 at 904-737-4700 to discuss your case as soon as possible. The consultation is free.

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