Legal Injury GuideFunctional Capacity Evaluations and Vocational Experts: Proving Lost Earning Capacity After an Injury
A deep guide to how lost earning capacity is proven: functional capacity evaluations, vocational assessments, economists, present value, and the common defense challenges.
For many serious injury claims, the largest economic loss is not past income. It is the future: the career that can no longer be pursued, the promotion that will not come, or the need to switch to lower-paying work. This is lost earning capacity, and proving it usually requires a combination of medical restrictions, functional testing, vocational analysis, and economic calculation. This guide explains how those pieces fit together. It is general information, not legal advice.
Lost earning capacity versus lost wages
- **Past lost wages** are income actually missed, documented by pay records and employer statements.
- **Lost earning capacity** measures the reduced ability to earn over the rest of a working life. It can exist for students, homemakers, unemployed people, or people who returned to work at lower pay.
Some states describe this as impairment of earning capacity, and the proof standards differ by jurisdiction.
Step 1: Medical restrictions
The foundation is a treating physician or medical expert explaining the permanent restrictions caused by the injury, such as no lifting over a certain weight, limited standing, or cognitive limitations after a brain injury. Without medically supported restrictions, the rest of the analysis has little support.
Step 2: Functional capacity evaluation
A functional capacity evaluation (FCE) tests physical abilities in a structured way, typically over several hours or across more than one day. Common elements include:
- Lifting and carrying at different heights.
- Pushing and pulling.
- Sitting, standing, and walking tolerance.
- Hand function and repetitive tasks.
- Consistency-of-effort measures.
The results are often expressed using job demand categories such as sedentary, light, medium, heavy, and very heavy work. Consistency-of-effort testing matters: if the evaluator reports inconsistent effort, the defense will emphasise it, so the evaluation should be well-documented and performed by an experienced examiner.
Step 3: Vocational assessment
A vocational expert compares the person’s pre-injury and post-injury employability by looking at:
- Education, training, work history, and transferable skills.
- The functional restrictions from the medical evidence and FCE.
- Labor market data about job availability and wages for suitable positions.
- Whether retraining is realistic, and its cost.
The vocational expert may conclude that the person can no longer work, can work only part-time, or can work in a lower-paying field. The difference between pre-injury and post-injury earning potential is the basis for the economic loss.
Step 4: Economic analysis
A forensic economist typically:
- Projects the earnings stream with and without the injury.
- Applies a work-life expectancy, often using statistical tables.
- Accounts for fringe benefits such as retirement contributions and health insurance.
- Reduces future amounts to present value using a discount rate.
Different economists may use different assumptions, so the methods should be transparent and defensible.
Common defense challenges
- **The person could return to the same work** with accommodations.
- **Pre-existing conditions** would have limited the career anyway.
- **Speculative career paths**, such as an anticipated promotion or new profession not yet started.
- **Effort and credibility issues** in the FCE.
- **Mitigation**, arguing the person did not try hard enough to find suitable work.
- **Economic assumptions** about growth and discount rates.
Each challenge is met with evidence: employer statements about past performance, documented career plans, consistent medical opinions, and evidence of genuine job search efforts.
Practical steps for injured people
- Keep tax returns, pay stubs, and benefits records from several years before the injury.
- Document career plans, licenses, training, and promotions in progress.
- Follow medical advice and attend therapy; gaps can be used to argue the restrictions are not genuine.
- Keep records of any job search or retraining attempts.
- Avoid settling before restrictions are reasonably permanent and understood.
Bottom line
Lost earning capacity can be the largest component of a serious injury claim, but it must be built step by step: medical restrictions, objective functional testing, vocational analysis, and sound economics. Each link must be supported, because the defense will test them all.
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Frequently Asked Questions
What is the difference between lost wages and lost earning capacity?
Lost wages are income already missed before resolution. Lost earning capacity is the reduction in ability to earn in the future, which can exist even if the person was not working at the time or later returns to a different job.
What is a functional capacity evaluation?
An FCE is a structured series of physical tests, often performed by a physical or occupational therapist, that measures abilities such as lifting, carrying, sitting, standing, and repetitive movement, and compares them to job demands.
Why do future losses need an economist?
Future earnings must typically be projected over a work-life expectancy and reduced to present value. Economists apply growth, discount, and work-life assumptions in a way that can be explained and tested.
For informational purposes only. Not legal advice. Consult a licensed attorney.