Lost wages and lost earning capacity
Lost earnings should be the easiest part of a claim to prove and frequently are not, because the way most people are actually paid does not match the way insurers want it documented.
Two different things
| Lost wages | Income you have already lost. Backward-looking, specific, and provable with records. |
|---|---|
| Lost earning capacity | The reduction in what you are now able to earn going forward. Forward-looking, often much larger, and routinely left out of claims entirely. |
The second matters most and is claimed least. A carpenter who returns to work but can no longer carry a full day, or a nurse who moves to a desk role at lower pay, has a loss that no payslip shows. It generally needs a vocational assessment and sometimes an economist to quantify properly.
If you are employed
- A letter from your employer on headed paper stating your role, rate, normal hours, dates absent, and pay lost. This is the core document.
- Payslips for several months before and after, so a pattern is visible rather than asserted.
- Tax returns and W-2s for the previous two years, which establish the baseline.
- Doctor's notes taking you off work or restricting duties. Without medical support for the absence, an insurer will treat it as elective.
- Evidence of what you lost beyond base pay — overtime you would ordinarily have worked, a shift differential, a bonus tied to attendance or performance, a promotion that was in train.
If your income is variable
Hourly workers with variable shifts, tipped workers, commission earners and gig workers all face the same problem: there is no single number that describes what they earn.
- Use a long enough window. Twelve months of payslips or earnings statements shows a genuine average and absorbs seasonal variation.
- Tipped income is real income. Reported tips on tax returns and POS records are the evidence; a colleague in the same role working the same shifts is useful corroboration.
- Gig and platform work produces excellent records — the apps generate per-week earnings histories that are hard to dispute. Download them before any account access lapses.
- Commission needs the pipeline as well as the history: deals in progress that someone else closed, or that did not close at all.
If you work for yourself
This is the hardest category and the one where claims are most often undervalued. There is no employer to write a letter, income fluctuates, and the business may have continued generating revenue without you.
- Tax returns, Schedule C, and 1099s for at least two and preferably three years. Everything starts here.
- Profit and loss statements for the periods before, during and after.
- Jobs you had to turn down — in writing. An email declining work, a text to a client, a quote not followed up. This is the single most persuasive category of evidence and almost nobody keeps it.
- The cost of covering for you — a contractor or temporary hire engaged because you could not work is a direct, documented loss.
- A letter from your accountant explaining the figures and the trend.
Questions people ask
Do I claim my wages before or after tax?
Before tax. Gross earnings are what you lost. Paid leave you were forced to use also counts — it had value and it is gone.
I am self-employed. How do I prove what I lost?
Tax returns and profit and loss statements establish the baseline, and the most persuasive additional evidence is written proof of work you had to turn down — emails, texts, declined quotes. Keep every one of them from the day of the injury. A letter from your accountant explaining the trend helps considerably.
I went back to work but I cannot do as much. Is that claimable?
Yes, as lost earning capacity, and it is frequently the largest component of a serious claim. It usually needs a vocational assessment and sometimes an economist, because the loss is the difference between the earning trajectory you had and the one now available.
I used my sick leave, so I was paid. Did I lose anything?
Yes. That leave was earned, it had value, and you no longer have it. It is claimable, and it is overlooked constantly.
Related
Reviewed October 2026 by Simon Aziz Budhwani, Esq., the attorney responsible for this site. Legal statements here name the California code section they rely on, so you can check them rather than trust them. This is information about the law in general, not advice about your situation.
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