Earning Capacity Analysis

An earning capacity analysis is performed in cases in which it is necessary to determine the impact of an injury or incident on an individual’s employment and earning potential. An earning capacity analysis is usually performed in instances where an individual is no longer able to return to his or her customary employment (e.g. due to an alleged personal injury or wrongful termination) and the individual’s mitigation earning capacity, if any, must be determined and then compared to his or her earning capacity absent injury or incident.  Key constructs in an earning capacity analysis include but are not necessarily limited to an individual’s wage or salary base, employer-paid benefits, worklife expectancy, wage or salary growth, and an interest rate or rates used to discount future earnings to present value. Other than in a wrongful death claim, in which mitigation earning capacity is inherently zero, these constructs must be assessed both pre- and post-injury or incident.