Learning how to recover lost wages if you’re self-employed can be difficult when compared to the ease with which they are calculated if you are an hourly or salaried employee of someone else. Proving the value of your lost income may require the help of a forensic accountant. Accidents happen suddenly, and the loss of income, while you are receiving treatment for your injuries or recovering, can be catastrophic to your finances. An experienced personal injury attorney will be able to help walk you through the process of claiming your lost wages as damages.
You will be able to sue for the cost of your medical expenses. Your hospital bills, bills from physicians, any equipment required for your recovery, and expenses related to a recovery facility can all be included in the lawsuit. Learning how to also recover lost wages will be important to you as well if you want to ensure that you’re not being taken advantage of by the defendant or his or her insurance company.
How to Recover Lost Wages if You’re Self-Employed
Like any personal injury lawsuit, you’ll first need to prove that another person or business entity is responsible for your injuries and was negligent. Where a case becomes more complicated for a self-employed person is in the calculation of lost wages. If you work for someone else, either as an hourly or salaried employee, it is rather straightforward to calculate how many hours or days of work you lost due to your injuries and provide a letter stating what regular compensation and bonuses, commissions, or other forms of compensation you missed out on. You can also include any sick, vacation, or bonus days you had to use during your hospitalization and recovery. If you are self-employed, the process becomes more complicated.
For example, if you’ve been hit by a truck driver, the damages and injuries can be extensive due to the size of the trucks and trailers. If you are self-employed and trying to learn what to sue for in a truck accident case, you will want to discuss it with your attorney as soon as possible after the accident. You may be able to sue the driver, the company that employs him or her, and his or her insurance company to pay your medical bills, expenses, and lost wages. Because of the nature of your self-employment, it could be difficult to calculate your lost wages easily. Your attorney may employ the services of subject-matter experts to accurately calculate your losses and ensure you don’t settle for too little.
One person your personal injury lawyer may hire is a forensic accountant. He or she will be able to go over your company’s records and show historic figures for income during similar time periods, and even project future growth to determine how much income you were likely to have earned, yet missed out on due to the negligence of the defendant.
What Are Lost Wages?
Simply put, lost wages are any money you would have been able to earn if it weren’t for the negligent actions or decisions of someone else. Consider lost wages any time you’re filing a personal injury lawsuit, because they can form a significant portion of your total damages awarded.
Lost wages can cover a variety of types of income. Vacation days, sick days, or bonus days, for example, can each be calculated based on your hourly wage, or by your salaried pay scale multiplied by the number of days you had to spend away from work due to your injury. You can also calculate any hours missed after the sick and vacation days were used up. Including any bonuses, commissions, or other perks will be something your attorney may recommend as well.
For self-employed people, lost wages can include any jobs you had scheduled during the time period you spent recovering from your injuries. It can also include any jobs lost entirely due to the fact that they needed to be completed during that time period, yet you were unavailable. You will need to show proof that these jobs were granted to you, but then sourced with someone else, in order to include the amount in lost wages.
When you sue an insurance company after a car accident, you’ll want to include any loss of an income stream during the period of your injury and recovery. Even if it is more difficult to calculate when you’re self-employed, you’ll want to include losses in every affected facet of your life to ensure that you’re made whole again after the accident.
Calculating Lost Wages
One of the questions you may be asking is how are personal injury damages calculated? The answer to that question isn’t simple, because it depends on each victim’s specific situation. However, there are some similarities that you can expect to encounter when calculating your damages. If you’re a regular hourly or salaried employee, your attorney will request that your company provide documentation showing your rate of compensation, along with a letter that includes the dates you were not able to work and therefore receive said compensation. This number should include any sick, vacation, or bonus time off you used, along with unpaid time off after your sick and vacation days ran out.
The attorney will also include in those calculations how much you are estimated to have lost in bonuses, commissions, or other pay structure perks during the time period of your hospitalization and recovery. Unfortunately, it’s not as simple for a self-employed person, whether that be a freelancer, or small business owner.
If you’re self-employed, you can expect your attorney to utilize the services of a forensic accountant. The forensic account will be able to determine, from your company records, how much income is likely to have been lost during this time period. He or she will do this by putting together different pieces of information, such as:
- Past Income
- Lost Work
- Increased Expenses
Past income can be used to estimate lost wages during the period of time you were unable to work. To estimate lost wages in this way, tax returns, 1099’s, and bank records are used to show what you may have earned if you hadn’t been injured. For small business owners, accounting records or profit and loss statements can help to calculate what an average weekly or monthly income should be.
Showing past income, in the form of accounting records or profit and loss statements, can be particularly helpful in determining your true amount of lost wages if you are in an industry that has particularly busy periods. If your injury took you out of commission during a particularly busy period, a forensic accountant will be able to demonstrate how, during this particular period of time, you can reasonably be expected to have earned more than just the weekly or monthly average.
If you had landed a new client, or were unable to complete work as expected for an existing client during that period of time, you can show evidence of this as proof that you lost new or existing income streams due to your injuries. Your attorney may ask you for any documentation such as signed estimates, work orders, cancelled contracts, or emails from clients to use as evidence. Most of these documents will also have the agreed upon compensation listed, so your attorney will be able to more easily show how they correlate to lost income.
There is also potential loss of future income if you were unable to service a new client as agreed upon because of your injury. If that client has now found someone else to do the work you were originally contracted for, ask your attorney if you can reasonably expect to receive some compensation for future income with the client that you lost because of this negligent accident.
Did you have to hire outside help to complete work you were unable to do in order to keep your business afloat? If you had to hire out some of your work to a third party due to your injuries, any kind of documentation of those agreements can also be used as evidence of lost income. Invoices, or proof of payment of those expenses, can be used to document your losses. You will be able to submit them as further evidence of how these injuries have affected you financially, in addition to your medical bills.
If you’re self-employed, and have been injured in a negligent accident, these additional tools will help your attorney to ensure that you get a fair settlement that includes your lost income. Your lawyer will endeavor to make sure that you’re made whole financially, even if your injuries are serious enough that you won’t be made whole physically after the accident. Recovering lost wages and other financial losses is an important tool in achieving that goal.