A serious injury can cost you more than the paychecks you already missed. If it keeps you from doing the work you were able to do before, California law lets you recover the difference for the rest of your working life. That claim is called loss of earning capacity, and in a serious California injury case it is often the largest number in the file. Borna Houman Law represents injured people across Los Angeles County from our office at 2530 Wilshire Blvd in Santa Monica.
Loss of earning capacity in California is the difference between what you could have earned without the injury and what you can still earn with it. Under CACI No. 3903D the loss must be reasonably certain, and no work history is required. It is an economic damage, so the MICRA cap in Civil Code section 3333.2 does not limit it.
The insurance adjuster is not your friend on this claim. Adjusters count the days you missed. California law counts the working years you have left.
Hurt and not sure you can go back to the same work? We will tell you what your claim should include before you talk to the insurance company again. No fee unless we win. Call (888) 42-BORNA for a free consultation.
What does loss of earning capacity mean in a California injury claim?
It means the injury has reduced your ability to earn money in the future, and the person who caused it owes you for that reduction. The Judicial Council’s civil jury instructions set out the claim in CACI No. 3903D.
A jury is told to decide two things. First, whether it is reasonably certain that the injury will cause you to earn less money in the future than you otherwise could have earned. Second, the reasonable value of that loss, found by comparing what it is reasonably probable you could have earned without the injury to what you can still earn with it.
The measure is what you could have earned. In Hilliard v. A.H. Robins Co. (1983) 148 Cal.App.3d 374, the Court of Appeal wrote: “The test is not what the plaintiff would have earned in the future but what she could have earned.”
How is loss of earning capacity different from lost wages?
Lost wages are the income you actually lost. Lost earning capacity is the ability to earn that the injury took away, whether or not you were using all of it on the day you were hurt.
| Type of damages | What it measures | Jury instruction | What it is based on |
|---|---|---|---|
| Past lost earnings | Income you have lost from the injury date to today | CACI No. 3903C | Your actual earnings |
| Future lost earnings | Income you will be reasonably certain to lose in the future | CACI No. 3903C | Your actual earnings |
| Lost earning capacity | The difference between what you could have earned and what you can still earn | CACI No. 3903D | Your ability to earn; no work history required |
You can claim more than one, but the same loss cannot be counted twice. The Directions for Use to CACI No. 3903D say that when future lost earnings and lost earning capacity are both claimed, the verdict form should ensure the same loss is not computed under both standards.
How is loss of earning capacity calculated?
It is calculated in four steps: what you could have earned, what you can earn now, how many working years are left, and whether the total is reduced to present value. Each step is a place where the insurance company will fight.
- Your earning capacity before the injury is shown by tax returns, W-2s, licenses, training, and the career you were on. Government wage data fills gaps.
- Your earning capacity after the injury is shown by your doctors’ work restrictions and the jobs that exist for someone with those restrictions.
- Your remaining working years are proved with evidence, usually from an economist or vocational expert, because California has no jury instruction on work-life expectancy.
- Whether the future loss is discounted to today’s dollars depends on the evidence the defense offers.
Here is a representative scenario, not a past result. A 34-year-old electrician in Los Angeles tears a rotator cuff in a crash and can no longer work overhead. The U.S. Bureau of Labor Statistics Occupational Employment and Wage Statistics for May 2025 put the mean annual wage for electricians in the Los Angeles-Long Beach-Anaheim metro area at $82,300.
Suppose the evidence shows this electrician can now earn $45,000 a year in lighter work. The annual loss is $37,300. Over 28 years, to age 62, that is $1,044,400 before any wage growth and before any reduction to present value.
The adjuster counts it differently. Five months off work at $82,300 a year is about $34,300 in lost wages. The gap between the two numbers is about $1 million.
Do you need a work history to claim lost earning capacity?
No. CACI No. 3903D tells the jury directly that a work history is not necessary. Students, stay-at-home parents, people between jobs, and people just starting a career can all recover.
The California Supreme Court settled this in Connolly v. Pre-Mixed Concrete Co. (1957) 49 Cal.2d 483, holding that loss of earning power can be inferred from the nature of the injury without proof of actual earnings or income either before or after the injury. The plaintiff was a champion tennis player about 20 years old, and the court affirmed a $95,000 verdict.
Going back to work does not end the claim either. Hilliard holds that impairment of the capacity or power to work is an injury separate from the actual loss of earnings. If you returned to your job in pain, on restrictions, or with a shorter career ahead of you, the capacity claim is still there.
What proof do you need for a lost earning capacity claim?
You need evidence of the career you were reasonably likely to have and what it pays. A plan alone is not enough.
Licudine v. Cedars-Sinai Medical Center (2016) 3 Cal.App.5th 881 is the leading example. A college senior planning to attend law school was injured during surgery, and a jury awarded her $730,000 for future economic loss. The trial court ordered a new trial on damages and the Court of Appeal affirmed, because there was no evidence she would graduate, pass the bar, or be hired, and none on what lawyers earn.
The court’s rule has two parts. The fact of the loss must be reasonably certain, and the amount is measured by the career choices the plaintiff had a reasonable probability of achieving. On retrial, the total verdict was $7,619,457, reduced to $5,594,557 after the medical malpractice cap on noneconomic damages, as the Court of Appeal recounts in its 2019 opinion in the same case.
Expert testimony is not always required. In Lewis v. Ukran (2019) 36 Cal.App.5th 886, a motorcycle crash case, the Court of Appeal said expert testimony is not vital to a claim for loss of earning capacity and left a $1,200,000 award in place. In our experience representing injured people, the cases that settle for full value are the ones with a vocational evaluation and an economist’s report in the file before the demand goes out.
Is a lost earning capacity award reduced to present value?
Only if the defense proves the reduction or the parties stipulate to one. CACI No. 3904A states that the defendant must prove, through expert testimony, the present cash value of future economic damages, and Lewis v. Ukran confirms the defendant bears the burden of presenting expert evidence of an appropriate discount rate.
That is why the $1,200,000 in Lewis was not reduced. The defense offered no present value evidence, so there was nothing for the court to apply.
Future income taxes are not subtracted either. In Rodriguez v. McDonnell Douglas Corp. (1978) 87 Cal.App.3d 626, disapproved on another point in Coito v. Superior Court (2012) 54 Cal.4th 480, the Court of Appeal found no error in refusing to admit evidence of future tax consequences, reasoning that it would open the door to speculation.
What can the defense not use to shrink your earning capacity?
Three things are off the table by law: your race, ethnicity, or gender; your immigration status; and a life expectancy shortened by the injury itself.
Civil Code section 3361, in effect since January 1, 2020, provides that calculations of damages for lost earnings or impaired earning capacity shall not be reduced based on race, ethnicity, or gender. A defense economist cannot use tables that assume a woman or a Latino worker will earn less.
Evidence Code section 351.2 bars evidence of a person’s immigration status in a personal injury or wrongful death case, and bars discovery into it.
Under Fein v. Permanente Medical Group (1985) 38 Cal.3d 137, earning capacity is based on your life expectancy at the time of the injury, undiminished by any shortening the injury caused. Life expectancy tables, such as the Social Security Administration’s period life table, are evidence a jury may consider, not a fixed limit.
Do damage caps limit loss of earning capacity in California?
No. Lost earning capacity is an economic damage, and California does not cap economic damages. Civil Code section 1431.2 defines economic damages to include loss of earnings, loss of employment, and loss of business or employment opportunities.
The MICRA cap in Civil Code section 3333.2 applies only to noneconomic damages in medical malpractice cases. In 2026 that cap is $470,000 for injury cases and $650,000 for wrongful death, and it does not touch lost earning capacity.
The same is true if you were driving without insurance. Civil Code section 3333.4 bars an uninsured vehicle owner or driver from recovering noneconomic losses, with an exception when the at-fault driver is convicted of DUI. Economic damages, including lost earning capacity, remain recoverable.
The practical ceiling is insurance. California’s minimum auto liability limits are $30,000 per person and $60,000 per accident, which will not cover a seven-figure earning capacity loss. That is why we look for every policy, including your own uninsured and underinsured motorist coverage, as we explain in our guide to the average car accident settlement in California.
What should you do now to protect an earning capacity claim?
Start building the record before the insurance company builds its own.
- Get your work restrictions in writing from your treating doctor, with specifics on lifting, standing, and hours.
- Pull three to five years of tax returns, W-2s, and 1099s, plus licenses, certifications, and union records.
- Do not tell the adjuster when you expect to be “back to normal.” Read our guide on what not to say to an insurance adjuster first.
- Prepare for the defense medical exam. The insurer’s doctor will be asked whether you can work, as we cover in our guide to the independent medical examination in California.
- Do not settle until a doctor has said whether your restrictions are permanent.
In our experience, the most expensive mistake is settling during the first few months, when lost wages are small and nobody has yet asked whether the injured person can do the same job in ten years.
Frequently asked questions about loss of earning capacity
Can I claim lost earning capacity if I went back to work?
Yes. The claim is for reduced ability to earn, which is separate from wages actually lost. If you returned with restrictions, reduced hours, or a job you cannot keep doing for a full career, you can still recover.
Is loss of earning capacity economic or noneconomic damages?
Economic. CACI No. 3903D lists it as an economic damage, and Civil Code section 1431.2 includes loss of earnings and employment opportunities in the definition. It is not subject to the MICRA cap.
Will surgery increase my settlement?
Surgery does not raise a settlement by itself, and no lawyer can promise a number. What surgery often does is document a serious injury and lead to permanent work restrictions, and permanent restrictions are what support an earning capacity claim.
How much of a $50,000 settlement will I get?
Less than $50,000, because attorney fees, case costs, and medical liens come out first. Our guide to the California contingency fee walks through the math. If your earning capacity is impaired, check first whether $50,000 covers the loss.
Can a spouse recover for my lost income too?
No. Lost earning capacity belongs to the injured person. A spouse has a separate claim for loss of companionship and moral support, which we explain in our guide to loss of consortium in California.
How long do I have to file?
Two years from the injury for most California personal injury claims under Code of Civil Procedure section 335.1. A claim against a city, county, or state agency must be presented within six months under Government Code section 911.2.
Talk to a lawyer before you accept a lost wages number
If your injury changed what work you can do, the claim is larger than the missed paychecks. Borna Houman Law will fight for you and pursue maximum compensation for the career the injury took. Learn more on our Santa Monica personal injury lawyer page, our Santa Monica car accident lawyer page, and our practice areas.
Call (888) 42-BORNA for a free consultation. No fee unless we win. Bring your pay records and your doctor’s work restrictions, and we will tell you what the claim should include.
Written by Borna Houman, attorney at Borna Houman Law, California Bar No. 352339, 2530 Wilshire Blvd, Santa Monica, CA.
This article is general information about California personal injury law and is not legal advice. Reading it does not create an attorney-client relationship. The scenario above is illustrative and is not a prediction or guarantee of any result. Every case depends on its own facts and evidence.