Texas Lost Wages vs. Loss of Earning Capacity After an Accident

The difference between lost wages and loss of earning capacity

Lost wages (sometimes called lost earnings) are income you have already lost or are currently losing because of the injury — time away from work that has already happened or is still happening. They are backward-looking and tied to actual missed time and actual pay.

Loss of earning capacity is the reduced ability to earn money in the future because of lasting limitations caused by the injury. It is forward-looking and asks whether, and to what extent, your ability to work in a suitable occupation has been diminished — even if you eventually return to some work.

Past wage loss vs. future earning-capacity loss

Past wage loss covers the period from the injury through the present (or through a return-to-work date). It is typically calculated from actual missed time and actual pay, including documented overtime, commissions, bonuses, and other compensation you would have earned but for the injury.

Future earning-capacity loss looks ahead. It asks whether lasting restrictions, a changed prognosis, or an inability to return to the same occupation reduces what you can earn over your remaining work life. It is not the same as a projection of missed work, and it is not established by the fact that you missed time alone.

A claim can involve one, both, or neither. A short absence with full recovery may involve only past wage loss. A permanent restriction that changes your occupation may involve both past wage loss and future earning-capacity loss. The facts and the evidence determine which applies — not a formula.

Reduced hours, light duty, and lost future earning ability

Income loss is not limited to being completely out of work. These effects may all be relevant:

• Reduced hours or light duty — returning at fewer hours or in a restricted role can mean a partial wage loss even while you are working.
• Work restrictions — written restrictions from a treating provider can limit the tasks, shifts, or roles you can perform.
• Missed overtime — documented overtime you would have worked but for the injury may be included when supported.
• Lost bonuses and commissions — incentive pay you would likely have earned may be considered with the right records.
• Inability to return to the same occupation — when restrictions or prognosis prevent your prior role, future earning capacity may be affected.
• Reduced ability to earn in the future — lasting limitations can diminish the roles, hours, or pay you can command going forward.

Documentation that supports an income loss

Use records that connect the injury, the absence, the restrictions, and the pay. Common supporting records include:

• Payroll records, pay stubs, and wage statements
• W-2s, 1099s, and prior federal tax returns
• Employer verification of missed time, pay, and any reduced schedule or light-duty arrangement
• Time, attendance, and leave records
• Written work restrictions and work-status notes from a treating provider
• Medical records that connect the injury to the limitations and prognosis
• For self-employment: profit-and-loss statements, invoices, contracts, and comparable pre-incident periods

For a private worksheet that organizes a preliminary gross-income figure from these records, use the Texas Lost-Wage Documentation Worksheet. Values stay in your browser and are not transmitted or saved.

Why missed work alone is not the same as diminished earning capacity

Missing work shows a past wage loss. It does not, by itself, prove that your future ability to earn has been reduced. A person who misses several weeks and then returns to full duty at the same pay may have a past wage loss without a loss of earning capacity. A person who returns to a restricted role, or who cannot return to their occupation at all, may have both.

The difference turns on whether the injury leaves a lasting limitation that affects the work you can do going forward — and whether that limitation is supported by restrictions, prognosis, and the evidence available. Missed time is a starting point, not a conclusion.

Why future earning-capacity analysis depends on several factors

There is no fixed number that measures future earning-capacity loss. Whether it applies, and how much it matters, can depend on:

• Occupation — the physical and skill demands of the work you performed and the roles you might move into.
• Skills and training — transferable skills, licenses, and education that affect the roles available to you.
• Age and work-life considerations — the length of the remaining working horizon over which a limitation would apply.
• Physical restrictions — written limitations on lifting, standing, sitting, or other job demands.
• Prognosis — whether the condition is expected to improve, stabilize, or worsen.
• Evidence available — medical records, restrictions, employer records, and any vocational or earning evidence that supports the claim.

A web guide cannot determine any of these for an individual. It can only explain the factors an evaluation may consider.

Texas Civil Practice & Remedies Code §18.091 and how earnings losses are presented

Texas Civil Practice & Remedies Code §18.091 is an evidentiary rule about how certain losses are presented in a personal-injury case. It does not decide whether a claimant is entitled to recover a particular loss; it governs how a covered loss is proven when it is sought.

This affects how an earnings-loss figure is presented and proven, not the underlying right to recover. A gross lost-income number is not necessarily the figure that would be presented under §18.091, and the worksheet and calculator on this site produce preliminary gross figures for organization and education only — they do not apply the §18.091 net reduction or decide what is legally recoverable.

Review the official Texas Civil Practice & Remedies Code §18.091 and confirm how it applies with a licensed Texas attorney.

Frequently asked questions