How Do You Prove Lost Earning Capacity?

You are back at work, earning the same paycheck you received before the crash, and someone tells you that means you have no claim. Texas law may still allow recovery.

Lost earning capacity measures how the injury affected your ability to earn, even if your current income hasn’t changed.

Lost Earning Capacity Is Not the Same as Lost Wages

Texas treats these as separate forms of loss, with earning capacity assessed separately for the past and future. That difference often drives the value of a car accident claim involving lasting injury.

• Lost wages: income actually lost between injury and trial, which is its own separate claim.
• Lost earning capacity: your ability to earn a livelihood, and how far the injury impaired it.

How Texas Defines Earning Capacity

In McIver v. Gloria, 169 S.W.2d 710 (Tex. 1943), the Texas Supreme Court explained that the measure of the loss “is his capacity to earn, not his actual earnings.” You can prove capacity even for work you never performed.

Returning to Work at Full Pay Does Not End the Claim

Earning as much as or more than before does not bar recovery. In Mikell v. La Beth, a 1961 Houston decision, the claimant continued receiving his full wages but turned down overtime and used sick leave.

Strauss v. Continental Airlines, a 2002 Houston decision, also rejected the argument that rising income automatically defeats a loss-of-earning-capacity claim.

The Proof Texas Courts Require

Texas permits a reasoned estimate of lost earning capacity, but expects you to present the evidence reasonably available to you.

Evidence a Jury Can Measure in Monetary Terms

McIver recognizes that future earnings are uncertain. The amount is left largely to the jury’s judgment, and you need to prove damages only with the certainty the circumstances allow. You do not need an exact figure, but you must provide facts from which the jury can determine one.

Bonney v. San Antonio Transit Co., 325 S.W.2d 117 (Tex. 1959) explains the other part of the standard. You must introduce evidence from which a jury may reasonably measure your earning capacity in monetary terms, unless some reason appears for your failure to do so.

Why Texas Courts Reverse Earning Capacity Awards

Two reversals show the pattern.

• Bonney involved a watch repairman who gave up his trade but offered no evidence of his earlier earnings or another monetary measure. Because no reason was given for the gap, the court reversed the award.
• Border Apparel-East v. Guadian, a 1993 El Paso decision, reversed a future earning-capacity award because the claimant’s earnings figures were readily available but never offered. She also presented no evidence about her stamina, efficiency, or degenerative changes. Her lawyer’s unsupported hourly figure could not fill that gap.

Texas courts allow for uncertainty about future earnings, but an award may be reversed when available evidence is not presented.

Building the Evidence Record

A well-supported Texas claim typically includes a vocational assessment of what you can still do, your wage and tax history, and an economist’s calculation of the loss over your remaining work life. These records are especially useful in truck accident cases and other catastrophic injury claims.

Wage, Tax, & Occupational Wage Records

• The IRS Wage and Income Transcript shows W-2 and 1099 data for the current and nine prior tax years, online or by Form 4506-T.
• The Occupational Employment and Wage Statistics tables for Texas show what your occupation pays.

King v. Skelly, 452 S.W.2d 691 (Tex. 1970) shows how occupational wage evidence can support a claim. A self-employed welding contractor provided no evidence of his prior earnings. He testified about what pipeline welders earned and what the lighter work he attempted paid.

The Court found that evidence was sufficient to provide a monetary measure. It also explained that the contractor’s business profits would have been a poor measure because they came from his labor, employees, and machinery.

Vocational Experts & Economists

Expert testimony is not legally required, as King v. Skelly shows. Vocational and economic experts can still provide a clearer measure of the claimant’s long-term loss.

In Critical Path Resources v. Cuevas, a 2018 Houston decision, each side called a vocational expert and an economist who converted those opinions into present-value figures. The awards held up because they fell inside the range those opinions bracketed.

Vocational testimony is about realistic employability against unimpaired competition. Courts may consider past earnings, stamina, efficiency, ability to work with pain, physical weakness, degenerative changes, and work-life expectancy. An impairment rating is not required.

Claimants With Little or No Earnings History

Texas law allows recovery even when someone was not earning income at the time of the injury. McIver holds that being out of an occupation when injured does not bar a claim and explains how the required proof varies by the claimant’s work history. The same rules apply in premises liability cases.

• Children and minors: the jury values lost capacity based on common knowledge and its sense of justice.
• Homemakers: the money value of the services need not be proved.
• People unemployed when injured: McIver itself involved a tenant farmer not farming that year, and his award stood.
• Fixed wage and salary earners: previous earnings ordinarily must be shown.
• Business owners and professionals: earnings or the value of services in that business must be shown with reasonable certainty.
• Students and young workers: future capacity damages remain available on evidence of interrupted education and unsteady work.

When an injury reduces earning capacity without eliminating it, courts may compare earnings before and after the injury.

Taxes, Present Value, & the Defenses That Shape the Number

Tax treatment, present value, and defenses concerning your conduct can all affect the final figure.

Net of Tax Proof & Present Value

Texas Civil Practice & Remedies Code § 18.091 requires lost earning capacity to be proved net of income tax. It also requires the court to instruct the jury on whether the recovery is subject to federal income taxes. The same statute covers lost contributions and lost inheritance in wrongful death claims. Your lost earning capacity calculation should use after-tax income.

The jury’s answer also incorporates present value, asking what would compensate you if paid in cash now. In Regent Care of San Antonio v. Detrick, a 2020 Texas Supreme Court decision, the court held that paying a present-value award over time would improperly reduce its value twice. An economist can calculate the future loss in present-value dollars.

Mitigation, Collateral Benefits, & Filing Deadlines

Failure to mitigate means failing to take reasonable steps to limit your losses. In Moulton v. Alamo Ambulance Service, a 1967 Texas Supreme Court decision, the claimant continued working against medical advice, aggravated his injury, and eventually lost his job. Treatment gaps and ignored medical restrictions may therefore affect the damages awarded.

The collateral source rule generally prevents disability benefits and sick pay from reducing the damages a defendant owes. The paid-or-incurred limit in Section 41.0105 applies only to medical expenses. Liens, subrogation, and workers’ compensation involve separate issues your attorney may need to address.

Other Texas rules can also affect the claim:

• You generally have two years to file a Texas personal injury suit under Section 16.003.
• You cannot recover if you are found more than 50 percent responsible. A percentage of 50 percent or less reduces your recovery by the same amount under Section 33.001.

Talk to Angel Reyes & Associates About Your Earning Capacity Claim

An earning capacity claim can fail if you don’t gather evidence early. Angel Reyes & Associates has guided injured Texans for over 30 years. Contact us for a free consultation.

Past results do not guarantee future outcomes.