A Houston Court of Appeals issued an important opinion in an Exxon refinery explosion case. This January 2026 decision has provided helpful insight into how the court considers damages reductions and disfigurement damages.
Another factor that was present in this case was lost earning capacity.
Many people think “income loss” is only about missed paychecks. But in Texas, there is an important difference between lost wages and lost earning capacity. Lost wages are what you did not earn because you could not work. Lost earning capacity is broader. It is about whether an injury permanently reduces your ability to earn a living, even if you are still working.
What lost earning capacity means in Texas
Lost earning capacity is the loss of the ability to earn income in the future. It is not limited to a single job or employer, but is about your comprehensive earning power as a person. Texas law allows a jury to consider many factors, including:
- Your age, education, skills, training, and work history
- Your medical restrictions and functional limitations
- Your expected work-life path before the injury
- The types of jobs you can realistically perform after the injury
- Whether you can work full time, overtime, or in physically demanding roles
- Whether you have become more vulnerable to job loss, layoffs, or future labor-market changes
Lost wages vs. lost earning capacity
Although it can be easy to use these terms interchangeably, they have different definitions in a Texas court.
Lost wages (past income loss)
This is usually a concrete number: the pay you missed because you were unable to work, plus used leave, missed bonuses, or missed overtime you can prove.
Lost earning capacity (future loss of earning power)
This is about the challenges you face over time. Even if you return to work, you may face:
- Fewer job options
- Reduced hours
- Reduced productivity
- Inability to perform essential tasks
- Inability to advance the way you would have
- Loss of higher-paying work that you could have pursued
For example, a worker returns to the same employer but can no longer climb, lift, travel, or tolerate long shifts. The paycheck may look similar today, but the injury can still reduce long-term earning power.
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Common work scenarios and how outcomes can differ
Scenario 1: You cannot return to your old work
This is often the clearest lost earning capacity scenario. If medical restrictions prevent you from returning to a trade or profession you performed before, the case focuses on:
- What you earned before
- What jobs are realistically available now
- What those jobs pay
- How long you are expected to work
Evidence often includes vocational rehabilitation analysis and an economist’s present-value calculations.
Scenario 2: You return to work, but with restrictions
This is common in spine and orthopedic injuries. You may return, but you cannot do:
- Heavy labor
- Extended standing or sitting
- Repetitive bending, lifting, or twisting
- Long shifts, overtime, or travel
The earning capacity question becomes: Has the injury reduced your ability to earn over the long run, even if you are working today? The proof typically shows that the injury has narrowed your options and increased vulnerability.
Scenario 3: A career track is derailed
In some cases, the injury changes a person’s trajectory:
- A younger person cannot complete training or certification
- A professional cannot handle the pace or travel demands
- A worker loses promotional opportunities due to physical limits
- A person moves into lower-demand roles with less advancement
Courts look for real evidence of the pre-injury track and how the injury disrupts it, rather than broad speculation.
What evidence helps win lost earning capacity cases?
Strong evidence to prove lost earning capacity often must come from multiple sources. It can include:
Work history and earnings records
The foundation is showing what you were earning and what your work life looked like before the accident. Useful records include:
- W-2s, 1099s, and tax returns
- Pay stubs and payroll summaries
- Job descriptions, certifications, and training history
- Overtime history and typical weekly hours
Medical limitations translated into work limitations
Medical testimony is important, but juries need practical translation:
- What physical activities are restricted
- What endurance limits exist (e.g., standing, sitting, lifting)
- What symptom triggers affect work (e.g., pain flares, cognitive fatigue)
- What accommodations are required and are they realistic in the market
Vocational evidence
A vocational expert can explain employability and labor-market access. This often includes:
- Transferable skills analysis
- Job options within restrictions
- Wage ranges for realistic jobs
- How restrictions affect competitiveness and reliability
Economic analysis
An economist typically:
- Uses past earnings as a baseline
- Estimates future earnings but for the injury
- Estimates future earnings after the injury
- Accounts for work-life expectancy, wage growth, and present value
It’s important to present a reasonable evaluation. A strong economist’s work is transparent about assumptions and ties them to evidence.
What if you are self-employed or have a variable income?
Business owners, contractors, and commissioned workers often have income that rises and falls. The proof is more complex, but still manageable. Strong evidence includes:
- Tax returns and profit-and-loss statements
- Business records showing pre-injury capacity and post-injury decline
- Testimony about lost hours, lost jobs, and operational limitations
- Reasonable projections supported by past trends
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What are common insurance company arguments against loss of earning capacity?
The bottom line of almost any insurance company is to pay out as little as possible. Here are some common arguments we see when they attempt to do just that, as well as typical rebuttals.
“You went back to work, so there is no loss.”
Returning to work does not automatically eliminate lost earning capacity. The real issue is whether the injury reduces long-term earning power, options, and reliability.
“This is speculation.”
Courts require a reasonable basis. The practical response is to anchor the claim in work history, medical restrictions, and credible vocational and economic analysis.
“Your income did not drop.”
Income can stay the same for a while, especially if an employer accommodates or if a person pushes through pain. But earning capacity considers long-term vulnerability, reduced options, and the ability to sustain work over time.
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FAQs about loss of earning capacity
Can I recover lost earning capacity if I still have a job?
Yes, you can if the injury reduces your earning power over time, even if you are employed today.
What should I do to prepare to present a loss of earning capacity?
- Gather earnings records early. The quality of documentation often determines how defensible the numbers are.
- Document work restrictions and job changes, including missed promotions, reduced overtime, and changed duties.
- If self-employed, preserve business records and identify pre-injury trends.
- If you are young or in training, preserve school and certification records and the expected career path evidence.
Will I need an economist?
Not in every case, but in serious cases it is often helpful. Courts and juries typically prefer a clear, organized framework rather than rough estimates.
What if my income increased after the injury?
That does not automatically defeat the claim. The question is whether your options, endurance, and long-term trajectory were reduced.
How do courts prevent speculation?
Courts look for a reasonable basis: documented earnings, credible restrictions, vocational analysis, and transparent economic assumptions.
How Crosley Law approaches loss of earning capacity
Lost earning capacity is a damages category that benefits from careful organization. We focus on building a clear story of earning power before the injury, work limitations after the injury, and how those limitations change long-term options. We also focus on presenting assumptions in a way that is understandable to juries and defensible if challenged later.
If a personal injury affects what you can do at work, how long you can work, or what jobs you can realistically pursue, lost earning capacity may be part of your claim. Crosley Law represents injury victims across Texas, including San Antonio and Bexar County. Call (210) LAW-3000 or submit a consultation request through our website.
The content provided here is for informational purposes only and should not be construed as legal advice on any subject.
