Proving Lost Income and Lost Earning Capacity in The Oregon Injury Claim


in many cases, establishing a claim for lost income and in Oregon or Washington auto injury case is straightforward. A person is injured, a physician takes them off of work, and upon the return to work, a simple calculation is used to figure out the lost income. This happens from time to time, but often the issue is not so straightforward.

Lost income is a form of "economic" damage in Oregon, and a form of "special" damage in Washington. This simply means that this loss is objectively verifiable. When making a demand for settlement with an insurance company, or proving these claims to a jury, the best practice is to over document this loss. At a minimum, there should be prior wage earning records, written notes from the physician authorizing our client to be off work, and an accurate calculation of the actual income lost as a result of the injury or disability.

Future Lost Income

Proving something that already happened is always much easier than proving something that is going to happen. It somebody suffers a serious injury and is no longer able to work a certain occupation, then there is a potential claim for future lost income. However, there are a couple of important considerations.

First, anyone who is injured and suffers a loss, has a duty to "mitigate" their damages. In other words, if an injury keeps somebody from pursuing their prior work, they have a responsibility under the law to do their best to minimize their loss, and find work that they can physically perform. When an injured person finds other work, he or she still may be able to claim the difference between what they would have been earning and their current income but for their injuries and limitations.

A common defense to future lost income claims is the argument for "present value." If somebody is making a claim for a certain amount of lost income over the next twenty years, for example, it does not necessarily mean that the injured person should recover the full amount of future lost income.  Instead, the injured person may be only entitled to the amount of money that, if set aside in a savings account, with earn enough interest over the next twenty years to equal the total amount of future lost income.  This is the "present value."  The argument is that if you compensate a person for future lost earnings by paying the total amount up front, that person could earn interest on that money, and will be over-compensated. Often times, economists are retained to calculate the present value of the future lost income claim, as well as the impact of inflation on the cost of money over time.

Lost Earning Capacity Distinguished

Lost earning capacity, or future lost earning capacity is not the same as a claim for lost income. Instead, it is more accurately described as a claim for the future inability to do certain kinds of work. We have represented many clients who work in physically demanding occupations on a seasonal basis, and a serious injury has taken away the ability to pursue that job opportunity. There are also cases where somebody might not even be employed at the time they were injured, but because of their injury, opportunities have been taken away. Because of the many ways someone can suffer a loss of earning capacity, the law is somewhat flexible in presenting a claim for lost earning capacity. Still, lost earning capacity claims can be in challenging.

Self Employment

Self-employed folks they special challenges in documenting lost income. Many times, it is hard to document the value of a self-employed injured person's "sweat equity," and what it means to their business. In some cases, the lost income may be documented with the increased expense of having to contract out or hire additional help. In other cases, the lost income may be missed business opportunities.

As with any claim for damages, there needs to be a direct connection between the lost income and the injury or disability. Defense attorneys and insurance adjusters commonly argue that the lost self-employment income claims are speculative, or due to other causes, including normal business cycles. When these complex issues arise, expert opinions can be valuable.

If you have suffered an injury, and think you may have questions about documenting a lost income claim, call us at 503-325-8600. We have helped many people with lost income claims as part of their personal injury case.