Lost wages are usually the second-largest piece of an injury settlement — after medical bills. They're also the piece most claimants undercount. Here's how to get the number right.
The basic formula
Hourly worker: hourly rate × hours missed per pay period × pay periods missed.
Salaried worker: (annual salary ÷ 2,080) × hours missed.
Self-employed: average weekly net income from the prior 12 months × weeks missed. Use Schedule C, 1099s, and bank deposits.
What counts as lost wages (most people miss these)
- Base hourly or salary income
- Overtime you regularly worked
- Tips and commissions (use tax records)
- Bonuses you would have earned
- Sick days and PTO you had to use (these are recoverable)
- Missed business opportunities (contractors, sales reps)
- Reduced earning capacity if you can't return to the same role
- Lost benefits (health insurance contributions, 401(k) match)
Documentation insurers will demand
- Letter from employer confirming dates missed and rate of pay
- Recent pay stubs (8 weeks pre-accident is standard)
- W-2s or 1099s for the prior 2 years
- Tax returns for the prior 2 years
- Doctor's notes restricting you from work
- For self-employed: profit/loss statements, client invoices
Future lost earning capacity
If your injury permanently affects your ability to work — surgeon who can no longer stand for long periods, electrician with a permanent hand injury — your claim should include a vocational expert's projection of future earnings loss. This is often a six-figure component of serious injury settlements.