If you have been injured and are forced to miss work or miss the opportunity for work, you can seek lost wages as an item of damages from the at-fault insurance company. A common question we are asked is, “how do I prove lost wages in a personal injury case?”
Proving lost wages for a W-2 employee is pretty clean and simple. If you are a W-2 employee, someone who gets paid the same amount every two weeks, the easiest way to prove lost wages is to get a pay stub. From your pay stub, calculate your hourly rate and multiply that by the number of hours you were forced to miss work.
Currently though, we have an increasing ‘gig economy,’ a free market system in which temporary positions are common and organizations hire independent workers for short-term commitments” (Tech Target, 2022). Most gig employees are paid by 1099, meaning hours of work are not necessarily consistent. So if a 1099 employee is forced to miss work due to a personal injury, it is more difficult to prove how much work, or compensation, was actually missed.
The best way to prove lost wages for a 1099 employee is to average out your typical compensation and hours worked. The longer the history of contract work available, the easier this is to do.
Another way to prove lost wages is to show documentation of work you were scheduled to do, that now will be delayed or canceled due to your personal injury. Documentation of scheduled work could be a text, email, or signed contract showing the type of work and compensation agreed upon by both parties.
Unless you are in a real niche industry, a business owner’s income fluctuates with the success of the business. Therefore, a business owner’s lost wages can be more difficult to prove in a personal injury case. Business owners need to review their tax documents, profit and loss statements, and more to determine a reasonable income or compensation for missed work.
Proving lost wages for 1099 employees and business owners is made easier with a history of earnings. Trying to extrapolate figures from your history of work to projections of what you would have earned had you not missed work due to a personal injury is how we go about calculating lost wages. This does not have to be proven with exact certainty; a reasonable projection of what you would have earned is legally sufficient in most states.
One thing to keep in mind when you receive damages for lost wages is that money is taxable. As opposed to money you might receive for bodily injury, medical bills, or pain and suffering, money for lost wages is still and will be considered taxable income. For this reason, depending on your case and the size of your claim, it may or may not be in your best interest to make a claim for lost wages. For instance, if you have a million dollars worth of medical bills and catastrophic lifelong injuries, it might not be worth arguing a small lost wages claim—you want the court to focus on your larger claims and your attorney will have more leeway to argue for an overall larger award that is not taxable. This allows you to benefit the most from the money awarded to you for your personal injury.