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Earning Capacity

The extent to which an individual is “disabled” by workers’ compensation standards requires an examination of the individual’s earning capacity after the injury in relation to his earnings prior to being injured. Even if the individual realizes a reduction in his earnings after the injury, he must still prove a causal link between the earnings reduction and his injury. Failure to do so will result in a denial of benefits. If the individual achieves earnings after his injury is sustained, there is a presumption that he has an “earning capacity” in keeping with such earnings. However, the presumption can be rebutted by evidence that the individual, in fact, has no earning capacity or that the post-injury earnings he received are not an accurate, fair, or reasonable measure of the individual’s earning capacity.

Generally, the recovery of benefits for a disability hinges on the individuals’ inability, as a result of an on-the-job injury, to work or obtain work in a position that fits his training, experience, or qualifications. However, consideration of the individual’s earning capacity will include an examination of post-injury earnings even if such earnings were from sources unrelated to the individual’s employment at which he worked when injured. If the individual returns to the same employment he held when injured, a rebuttable presumption applies that there is no loss of earning capacity.

When an individual receives post-injury earnings through permanent employment, the individual cannot claim that future uncertainties with such employment necessitate a finding of “disability.” However, if it is determined that such employment is not permanent and, should the individual lose this job, he will likely be unable to find further employment, a “disability” finding is appropriate.

Copyright 2012 LexisNexis, a division of Reed Elsevier Inc.