What Does “Loss of Earning Capacity” Mean in an Alabama Workers’ Compensation Case?

What Does “Loss of Earning Capacity” Mean in an Alabama Workers’ Compensation Case?

“My doctor says I have a 10% permanent impairment. Does that mean my workers’ compensation case is only worth 10%?”

This is one of the most common—and most important—questions we hear from injured workers.

The answer is usually no.

In Alabama workers’ compensation cases, a permanent disability claim is often based not on your medical impairment rating alone.  The first thing we look at is whether the injury is considered is to be a scheduled or non-scheduled injury.  If it is a non-scheduled injury, or if the facts of the case take the injury outside of the schedule, then we look to see if you can return to your job once you are placed at maximum medical improvement.

If you are unable to return to your job, we next look to see how your injury has affected your ability to earn a living in the future. That concept is known as loss of earning capacity, and it can have a significant impact on the benefits you may ultimately receive.

Simply put, Alabama law recognizes that two people can suffer the same injury but experience very different consequences. One person may return to work with few lasting effects, while another may find that the same injury permanently limits the kinds of jobs they can perform. Understanding that difference is essential to understanding your workers’ compensation claim.

Learn More: What is the Difference in a Scheduled and Non-Scheduled Injury and When can a Scheduled Injury be Removed from the Schedule

What Is Loss of Earning Capacity?

Loss of earning capacity is the reduction in your ability to earn wages in the future because of a permanent work-related injury.

Notice that the focus is on your ability to earn—not necessarily what you are earning today.  For example, imagine two employees who each earned $70,000 per year before a workplace accident.  Both sustain serious shoulder injuries.  One is an office manager who returns to work with only minor adjustments.  The other is an ironworker who can never again perform overhead lifting or heavy manual labor.

Although both workers have similar medical injuries, the second worker has lost access to an entire category of jobs that once provided a good living. That reduction in future employment opportunities is exactly what courts mean by loss of earning capacity.

Lost Wages and Loss of Earning Capacity Are Not the Same Thing

Many people use these terms interchangeably, but they compensate workers for two very different losses.

Lost wages involve money you have already lost because your injury prevented you from working. Temporary Total Disability (TTD) and Temporary Partial Disability (TPD) benefits are intended to replace part of those wages while you recover.

Learn More: What Are Temporary Total Disability (TTD) Benefits Under Alabama Workers’ Compensation?

Loss of earning capacity looks beyond today’s paycheck. It asks whether your permanent injury has reduced your ability to earn a comparable living over the course of your remaining working years.

That distinction is one reason why two workers with identical medical diagnoses may receive very different permanent disability awards.

Why Doesn’t My Impairment Rating Decide My Case?

This is another area that causes considerable confusion.

After you reach Maximum Medical Improvement (MMI), your authorized treating physician may assign a permanent impairment rating under the AMA Guides.

Many injured workers understandably believe that this percentage determines the value of their case, but in reality, the impairment rating is only one piece of the overall picture.

Related Article: What Is Maximum Medical Improvement (MMI) in an Alabama Workers’ Compensation Case? and Understanding Impairment Ratings in an Alabama Workers Compensation Claim

While the doctor’s opinion is certainly important, Alabama courts often look at many additional factors before deciding the extent of a worker’s permanent disability.

What Factors Can Affect My Earning Capacity?

Every injured worker brings a unique background to the courtroom.

When determining whether a worker has suffered a loss of earning capacity, courts frequently consider factors such as:

• your age;
• your education;
• your work history;
• specialized training or certifications;
• permanent medical restrictions;
• chronic pain;
• whether you can return to your previous occupation;
• whether your skills transfer to other types of employment; and
• testimony from vocational experts.

For instance, a permanent twenty-pound lifting restriction may have relatively little effect on an accountant but could effectively end the career of a warehouse worker, mechanic, or construction laborer.

The injury may be the same.

The impact on earning capacity is not.

Learn More: What if I am Unable to Return to my Job?

Why Are Vocational Experts Sometimes Important?

Medical doctors explain what your body can and cannot do, vocational experts explain how those limitations affect your ability to compete in the job market.

A vocational expert may evaluate:

• your education;
• your prior employment;
• transferable job skills;
• physical restrictions;
• available jobs in your geographic area; and
• expected future earning potential.

Their opinions can provide valuable evidence regarding whether a work injury has permanently reduced your ability to earn a living.

Learn More: What Does a Vocational Expert Do in an Alabama Workers’ Compensation Case?

Every Worker’s Story Is Different

Workers’ compensation cases are not decided by comparing X-rays or MRI reports alone.  They are decided by examining how an injury affects a particular person’s ability to make a living.

The same injury that causes only a minor inconvenience for one worker may permanently alter another person’s career.

That is why experienced workers’ compensation attorneys spend time understanding not only the medical records but also the client’s education, work history, career goals, and future employment opportunities.

When Should You Speak With an Attorney?

If you have reached Maximum Medical Improvement, have been given permanent work restrictions, or believe your injury has permanently limited your future employment opportunities, it is often worthwhile to have your claim evaluated.

An attorney can help gather medical evidence, obtain vocational evaluations when appropriate, analyze wage information, and present evidence showing how your injury has affected your long-term earning capacity.

The Bottom Line

Loss of earning capacity is one of the most important concepts in Alabama workers’ compensation law because it recognizes that a workplace injury can affect much more than the wages you lost while recovering.

The real question is not simply whether you returned to work. It is whether your injury has permanently changed your ability to earn a living in the years ahead.

If it has, that change deserves careful evaluation. A thorough understanding of your medical condition, work history, education, and future employment opportunities can make a significant difference in the outcome of your workers’ compensation claim.

The Bottom Line

Loss of earning capacity is one of the most important—and most misunderstood—concepts in Alabama workers’ compensation law. It recognizes that a workplace injury can affect far more than the paycheck you missed while recovering. A serious injury may permanently change the kinds of jobs you can perform, the income you can earn, and the opportunities available to you throughout the rest of your working life.

That is why determining the value of a workers’ compensation claim involves much more than looking at an impairment rating or whether you eventually returned to work. Your age, education, work history, physical restrictions, and the realities of today’s job market may all play an important role in evaluating how your injury has affected your future earning capacity.

At Powell and Denny, we have spent decades helping injured workers throughout Alabama navigate the complex issues that arise in workers’ compensation claims, so don’t hesitate to contact and speak with one of the experienced Alabama Workers Compensation and Social Security Disability attorneys at Powell and Denny today for a free consultation. Appointments are available in person, or virtually via Zoom if more convenient.  Powell and Denny would appreciate the opportunity to help.  And remember, there is no fee unless you win.

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Offices in Birmingham and Huntsville, Alabama