How Do You Calculate Lost Wages If You’re Self-Employed?
If someone goes to court for personal injury, or something very specific, like workplace accidents, then one of the key reasons for doing so is compensation for lost wages. After all, if you’re injured, and are no longer able to receive an income because you’re in no condition to work, then how are you supposed to survive, let alone support a family, if there’s one in the equation?
For the average, employed American, this is a pretty straightforward part of a lawsuit. Figuring out lost wages is a simple matter of looking at how much time will be lost from work, see what salary would be paid over the time, and simply enter that figure in as part of damages.
But for an increasing number of Americans, this is not quite as cut and dried for the simple reason that they are not salaried workers, relying on the same fixed income every month. A variety of Americans today are self-employed, either as entrepreneurs that run their own business, freelancers that provide a service, such as web design, or art, or even part-time workers of the new “gig economy” working with Uber to provide rides.
So when you don’t have a fixed income, but are injured seriously enough to be unable to work, how do you figure out what figure to attach to financial damages for lost wages?
For people who act as independent contractors, one of the best ways to start calculating lost wages is through revisiting the 1099-MISC forms filled out over the years. This is usually the safest, most legally reliable way to document earnings and then compile an average based on that, as the all the information is already safely in records, confirmed by the IRS, and can’t be disputed.
For people who are sole proprietors of a business, things are still straightforward, provided that business has been in operation for several years. If you’ve been filing your tax returns, then regardless of whether your business is seasonal, or other determining factors, an average can be compiled based on what your tax filings have been in the past few years.
Things are a bit more challenging for people that are new to business, and haven’t yet established this kind of longer track record. Proprietors and contractors may be able to prove lost wages by providing appointments for future contract work, or by showing past wages for previous jobs.
The Uber Factor
For people who are part of the ride-sharing trend, working with companies such as Uber and Lyft, there are, in fact, options to help people reclaim lost income. Both Uber and Lyft have a legal mechanism known as a “downtime claim” that can be used to try to recover lost earnings from being unable to drive to due to injury or damage to a vehicle.
Downtime claim is usually proven through the furnishing of earnings that you’ve made with a ride-sharing company. So while trying to calculate lost wages is something that anyone can do for lawsuit purposes, it is a little bit more complex for those that are self-employed.