Lost Wages

Lost wages are the pay you missed because someone else's conduct kept you from working. In an injury case, that includes time off for recovery, surgery, and medical appointments. In an employment case, it can mean back pay for wages you should have been paid or would have earned if you had not been wrongfully fired.

Lost wages are economic damages, meaning they can be calculated from records. Related categories include lost earning capacity (reduced ability to earn in the future), lost overtime, bonuses, and benefits like employer retirement contributions and health insurance. Self-employed people can claim lost profits, though they usually need tax returns and business records to prove them.

Proof matters. Useful documents include pay stubs, W-2s, tax returns, a letter from your employer confirming missed time and pay rate, and a doctor's note stating you could not work. For future losses, cases often use vocational or economic experts.

Taxes are a common surprise. IRS Publication 4345 explains that settlement proceeds for lost wages are generally taxable income, while damages received on account of a personal physical injury or physical sickness are generally not. How a settlement is divided can therefore affect what you keep. In wage and hour class actions, back pay portions are often paid with tax withholding like a paycheck.

See our guides on taxes on settlements and how settlement money is divided, and our page on unpaid overtime lawsuits.