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How to Calculate Lost Wages in a Personal Injury Claim

UPDATED: August 1, 2017

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If you are including lost wages damages in your personal injury claim or lawsuit, you will need to know what factors are used to calculate the value of the earnings you lost while recovering.  When you assess the value of a lost wages claim, you must be able to provide documentation that proves your injury, your pay, and your normal work hours in order to show a clear and accurate picture of the earnings you missed while injured.  Although calculating lost wages can be straightforward, it is important to be take your time and consult an attorney with specific questions.

Before Calculating Lost Wages Damages

Before you do anything, go to the doctor. You need to substantiate your injury claim with good medical documentation, and one way to do that is to see a physician or other health care provider and have a full examination. Be sure that if the doctor tells you to take time off from work, you don’t leave his or her office without a physician’s medical form in your hand, authorizing you to stay home from your job for the period of time necessary to recover from your injuries. 

You will need to keep your employer informed about your injury, your medical treatment, and the time you may miss.  Lost wages claims are difficult to prove if you are not authorized to miss work, so make sure you take all the necessary steps with your doctor and your employer to demonstrate the time off is necessary to your recovery.

Proving Lost Wages

In order to prove lost wages, you will first need to gather all the appropriate documentation to support your claim.  You will need: a letter from your employer indicating how much time you took off, what your hourly rate of pay or your monthly salary is, how many hours a week you work, and whether or not you typically work overtime. Once you have the necessary documentation, calculate your claim using the following steps:

  1. Determine the number of hours you missed from work.  If you work regular hours, simply provide documentation that shows your normal work schedule.  If your hours vary, you can calculate an average based on your last 2 or 3 months of work.
  2. Determine the number of overtime hours that you missed.  Overtime is typically not guaranteed, so you will need to provide documentation that shows your regularly worked overtime before your injury.  Again, going back 2 or 3 months will be sufficient.  If you recently were promised overtime by your boss, provide evidence of that conversation.
  3. Multiply the number of hours you missed by your hourly rate
  4. Multiply the overtime hours you missed by 1.5 times your hourly rate
  5. Add the values for regular hours missed and overtime hours missed to arrive at the total lost wages calculation

If you are a salaried employee rather than hourly, you will need to take a slightly different path:

  1. Divide your annual salary by the number of hours you work (hours a full time employee works per year: 2,080) in order to get the amount you earn per hour.  
  2. Calculate the number of hours you missed by multiplying the days you were out of work by 8 (typical work days for salaried employees 8 hours - even if you actually work more).  
  3. Multiply those two figures to calculate your lost wages.

Keep in mind that in most states, your lost wages are your gross earnings, not your net earnings. Some states only reimburse net wages, but regardless you should present your gross earnings and let the insurance company tell you they only reimburse net wages. Also note that if your injury was as a result of an accident on the job and you are making a workers’ compensation claim, it varies from state to state whether you will be reimbursed for gross wages, a percentage of gross wages, or net wages. 

Lost Wages Tips to Remember 

Aside from the basic wages calculation, there are a few things that you may be able to claim:

  • Money that reflects a promotion or wage increase.  If you were due for an increase and/or a promotion, make sure your employer notes this including how much more it would have been and when it was to take effect.
  • Lost commissions on sales
  • Bonuses that you were paid in the past and were on track to receive before your injury
  • Fringe benefits lost
  • Pension benefits lost

If you were unable to return to the same job, or your job was eliminated, and you were forced to take a lower paying job, then you can claim:

  • Difference in income between the two jobs.  Include in this calculation the length of time you will be at the lower paying job.
  • The money lost while you searched for a different job

If you are never able to return to work due to a serious injury, you will need to calculate lost earning potential based on your age, your employment and pay history, your job skills, and your quality of life that you earned prior to the accident.  Contacting a personal injury lawyer is the best way to ensure your lost wages calculations are accurate, fair, and well supported by documentation.

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