Missing work or losing your job because of auto accident injuries can be devastating. In a car accident case, awarding an injured person for lost wages and income is not uncommon. Even if you're a self-employed person, you may be entitled to receive compensation for lost income or lost business opportunities if the other driver was at fault for the car crash. But the process for proving damages is different for self-employed workers than it is for employees.
Read on to learn about how to prove lost wages in a personal injury case when you're self-employed.
Self-Employed vs. Employee
When it comes to making a lost wages claim, there are important differences between an employee and a person who is self-employed. Generally, you are considered self-employed if you are a:
If you are unsure if you're self-employed, check FindLaw's Being an Independent Contractor vs. Employee article.
What Are Lost Wages for Self-Employed Workers?
The term "lost wages" is often used interchangeably with lost income, lost compensation, and lost benefits. These all refer to the amount of earnings and profits you would have made if you weren't injured. These earnings include:
- Recent profits
- Upcoming contracts
- Lost business opportunities
- Lost goodwill
Don't confuse lost wages with lost earning capacity. Lost earning capacity is another type of damage that refers to the loss of future earnings.
Proving Lost Wages and Income
For self-employed individuals, proving lost wages and income may be more difficult than it is for employees. If you don't have proof of self-employment income or lost wages, you won't be able to receive any compensation for it. Provide the insurance company or the court with supporting documents and evidence.
Documents and Evidence
You will need to support your claim for economic losses by providing the following evidence:
- Proof of lost income and opportunity: The key is to show how much you would have earned from the date of the accident to the time of full recovery. You may be required to submit your 1099 tax document form(s), your tax return from the previous year, bank statements, correspondence, business invoices, pay stubs, or receipts, if applicable.
- Letter from your employer: Obtain a letter from your supervisor, boss, or office that states your identification info, employment status, compensation, and the number of work hours you missed from the accident to full recovery.
- Medical documents: Car accident victims need to provide documents that reflect their medical condition. It can be a doctor's note or a disability slip that contains a recommendation for time off from work.
Calculating the Amount of Lost Wages
The time you spend away from work should reflect the severity of your accident injuries. If your business or independent work has been steady, you may calculate your damages with your tax return from the previous year. However, if your business or independent work involves growing profits, additional benefits, or any irregularities, you may want to consider hiring a forensic economist or a personal injury attorney.
How Do Insurance Claims Factor Into Lost Wages for Self-Employed Individuals?
When you are self-employed and involved in a car accident that is not your fault, you have a right to recover lost wages through an insurance claim with the at-fault party's insurance company. This claim can be filed under the bodily injury liability coverage of the at-fault party's auto insurance policy.
Insurance companies, however, are often skeptical and rigorous when evaluating these claims. This is especially true for self-employed individuals. This is due to the less predictable nature of their income. They might require extensive documentation to prove that the claimed lost income is legitimate and directly related to the accident. This can include:
- Prior tax returns
- Business records
- Correspondence relating to lost business opportunities
If you work on a contract basis, it may be more challenging to show that you had to turn down contracts because of your injury. Compare this to an employee simply providing a letter from their employer confirming their absence.
How Can I Prove Lost Opportunities Because of a Car Accident?
Proving lost opportunities due to a car accident is often more challenging than demonstrating lost wages. It requires evidence of intangible or speculative income. But it's not impossible. Here are some ways you can substantiate your claim for lost opportunities.
First, gather and present all relevant documentation showing the lost opportunities you have suffered. This can include:
- Letters of intent that show a business opportunity that you had to forego due to your injuries
You can also provide evidence of past opportunities to establish a pattern. Imagine you regularly attend an annual conference where you secure new clients. But you missed this year's conference due to the accident. You could provide records of the past years' new clients and the income generated as evidence of your loss.
In some cases, testimonies from clients or business associates could also be beneficial. They can attest to the work you would have been offered if you had not been injured. This provides further evidence of lost opportunities.
What Should I Do if I Lose Upcoming Work Because of a Car Accident?
Losing upcoming work due to a car accident can be financially devastating. But you can take several steps to protect your rights and recover compensation for your loss:
- Document everything: Keep a record of all upcoming work you lose because of your injuries. This includes contracts that were canceled, events you couldn't attend, and clients you were unable to serve. It's crucial to have written records of these lost opportunities, such as emails or contracts.
- Communicate with your clients or business partners: Inform them about the accident and the reason for your inability to fulfill the agreed-upon work. Their responses and any rescheduling or cancellation notices should also be saved as proof of lost work.
- Consult a personal injury attorney: Given the complexities involved in proving lost wages for self-employed individuals, you might benefit from seeking legal advice.
By taking these steps, you can help build a strong case for compensation for your lost upcoming work following a car accident.
Get Legal Advice From a Personal Injury Lawyer
Putting together a lost wages claim when you're self-employed requires more than plugging numbers into an equation. Car accident injuries are more complicated for self-employed workers because of their irregular work schedules and the difficulty in proving wages.
If you're a small business owner who needs help proving wage loss, contact an experienced car accident attorney in your area today for help with your personal injury claim.