What is Impaired Earning Capacity?

Much confusion surrounds the claim of impairment of earning capacity.  While this claim used to be an element of noneconomic damages (“pain and suffering”), it has since become an element of economic damages (“out of pocket losses”).  However, proving the claim can be difficult.  Because of that difficulty, I submit the following in my Trial Memorandum in every case I try where I have an impaired earning capacity claim:

Vocational Expert Not Required to Prove Impaired Earning Capacity

Plaintiff need not offer a vocational expert as a witness in order to prove his impairment of earning capacity claim.  In DeVaux v. Presby, 136 OR App 456, 468 (1995), evidence showed that the plaintiff suffered a permanent nerve injury that caused his hand to occasionally open or close without warning, and was sometimes unable to sense heat or cold and affected his ability to perform his job.   In holding that this evidence was sufficient, the DeVaux Court reasoned that: “In the ordinary case, and as a general rule, evidence that a plaintiff has sustained a permanent injury is sufficient to entitle him to submit to the jury the question whether there has been an impairment of his future earning capacity.”  Id. at 464, citing Tavenner v. Figini, 273 OR 415, 417-418 (1975).

The DeVaux court rejected the defendant’s argument that the evidence was insufficient to satisfy the statutory requirement that economic damages be “objectively verifiable monetary losses” under ORS 18.560(2)(a), claiming that the plaintiff’s evidence of loss of future earning capacity was solely subjective, consisting of his own testimony about his inability to perform as he once did.  Id. at 459.  The Court held that ORS 18.560(2)(a) does not impose any particular pleading or proof requirements for recovery of loss of future earning capacity, and held that the plaintiff’s subjective testimony sufficed.  Id. at 463-64.

Moreover, it has long been the rule in Oregon that the jury is entitled to consider impairment of earning capacity when assessing damages, even though the plaintiff’s former job paid less than his or her present job, if the evidence shows that the plaintiff can no longer physically perform the former job.  Henderson v. Hercules, Inc., 57 Or App 791, 797 (1982).  Indeed, the jury may even consider a claim for impaired earning capacity if the plaintiff is unemployed with no present intent to work.  Richmond v. Zimbrick Logging, Inc., 123 Or App 631 (1993).

What is clear is that an award of impaired earning capacity is compensation for a defendant causing at least some avenues of employment to be closed to the Plaintiff.  Here, Plaintiff, while not having lost his job, has suffered permanent injuries which will restrict his ability to perform certain tasks in the future.  As those tasks relate to his employability, Plaintiff is entitled to compensation for that loss, in the form of an award of impaired earning capacity.   Therefore, Plaintiff’s evidence of permanent injury and continued inability to perform certain types of work is sufficient to get the issue of future impairment of earning capacity to the jury.

Thus, as the case law makes clear, an impairment of earning capacity claim need not lend itself to strict mathematical calculation.  In a large sense, it is simply the damage done to one’s salability of his or her services in the job market.  If, due to their injuries, a person is physically unable to work jobs they once could, their ability to go out and get a job or change professions has been damaged, and they are entitled to compensation as a result.  This is particularly true where, as now, the job market is hyper-competitive.  How can one seriously compete against scores of younger, able bodied people vying for the same job?  They simply can’t.

Likewise, as noted above, it is important to remember that the claim revolves around lost earning capacity.  The key here is the capacity to earn a living has been damaged.  It is not a claim for lost wages (e.g., the injured party had a job, missed work, and thereby lost wages), but a lost capacity to earn.  Because the umbrella is quite large, the claim covers, for example, housewives who might return to the market after the children are grown, employees on sabbatical, students who have not yet entered the labor market, or those thinking about changing professions one day.

The law is fair, and if presented properly, will justly compensate the injured for the harms and losses done to their ability to earn a living now, and in the future.

 

Lawyer Timothy Williams | Top Attorney Personal Injury | Tim Williams Attorney Profile

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