Proving Car Accident Lost Wages When You’re Self-Employed

Car Accident,Personal Injury - June 18, 2021 by Horwitz, Horwitz & Associates

Vehicle accidents can result in devastating losses for victims. In most situations, crash victims are able to recover various types of compensation from the at-fault party and the at-fault party’s insurance carrier. This compensation can include coverage of medical expenses, pain and suffering damages, and lost wages. The recovery of lost wages is important, particularly if a victim cannot make it to work while they recover or if they are unable to return to work because of a disability caused by the crash. However, in today’s economy, millions of workers across the country are self-employed. Here, we want to discuss how a self-employed individual can go about proving lost wages during their car accident claim or personal injury lawsuit.

What Does it Mean to be Self-Employed?

There has always been self-employment. To be self-employed simply means that a person does not have an employer – that they are not on actual payroll, do not receive a regular salary, or do not receive hourly pay.

Self-employment does not mean that a person is unemployed. In fact, this is far from the truth in most situations. Today, there is a vibrant and active gig-worker and freelance economy, and this type of employment situation is growing in popularity.

Proving Lost Wages After an Accident

Unfortunately, proving lost wages in the aftermath of an injury caused by another party is more difficult for those who are self-employed than for those who are employees. When a person works for an employer, there is usually concrete proof that can be provided to show lost wages in the event they are unable to work due to the injury. This can include weekly pay stubs, letters from an employer, and more.

When a self-employed person needs to prove that an injury has led to them losing income, they will still have to provide proof of the lost wages. It is critical to be able to provide supporting documents and evidence to the insurance carrier or to a personal injury jury if the case goes to trial, this is where a car accident lawyer can help out.

In order to prove lost income and wages, a self-employed individual can do so by providing the following types of documents and evidence:

• Letters from clients. It can be beneficial for an injured individual to get letters from any regular clients they may have. However, this will only work for self-employed individuals and freelancers who do have a regular client base. For example, it would be impractical for an Uber driver to get a letter from those that they provide rides for.
• Various types of financial documents. The bread and butter of these claims will revolve around financial documents that prove a person consistently earns self-employment income. This proof can come from 1099 forms that most self-employed individuals receive at the end of every year. This can also include tax returns from a previous year, business invoices, receipts, personal and business bank statements, and more.
• Medical documents. Of course, it will also be necessary to provide medical documentation showing that an injury has occurred and that the injury is serious enough to keep the individual from working.

When working to calculate the total amount of lost wages for a self-employed individual after an accident occurs, it will be necessary to look at how long a person is expected to have to step away from their work duties. If the self-employment business income has been steady, it may be possible to calculate the damages by using the tax return from the previous year. For example, if the injury keeps a person from working for one month, it may be possible to take the total income from the previous year, divide that by 12, and determine how much compensation the person usually receives over the course of a month.

However, if the business or independent work is not necessarily steady or if the business happens to be growing rapidly, it may be necessary to work with economic and financial experts to help calculate total expected losses.