Also known as: net earnings capacity · earning capacity
Written by attorneys — see sources below.
The net income a person is capable of generating after taxes and expenses. Courts award compensation for its loss or impairment only upon proof of actual pecuniary harm.
Lina Gems suffered flooded display cases and inventory after a pipe burst in her mall space. She presented invoices showing the value of ruined fixtures and sales records documenting reduced profits during the closure. The court awarded damages for harm to earning capacity because Lina proved the pecuniary amounts with reasonable certainty.
Carlos crushed his hand on a defective press at IronForge Corp. He introduced medical records and vocational expert testimony showing he could no longer perform assembly line work. The jury awarded damages for impairment of earning capacity after finding the evidence established the reduction in his net income potential.
Nathaniel Newman died from injuries sustained on a job site. His estate sought damages for lost future earnings. Recovery was limited to the net earning capacity he actually lost before death because the statute cut off post-death projections.
Nina Nielsen performed unpaid domestic and business services for her long-term partner over decades. She claimed the contributions increased the partner's net earning capacity. The court considered whether those services supported a claim for compensation measured by the resulting increase in earning power.
In 1952 plaintiff and defendant began living together and holding themselves out to the community as husband and wife. Defendant acknowledges that the two children born of the relationship are his. Plaintiff alleges that since the inception of the relationship she has performed domestic duties and business services at the request of defendant with the expectation that she would receive full compensation for them. Defendant has always accepted her services knowing that she expected compensation for them. They have filed joint tax returns over the past several years. Plaintiff seeks judgment in the amount of $250,000 on her first cause of action. The second cause of action realleges the first and adds that in 1952 the parties entered into an oral partnership agreement under which plaintiff would furnish domestic services and defendant would have full charge of business transactions. Under the agreement defendant would support, maintain and provide for plaintiff in accordance with his earning capacity, take care of the plaintiff and do right by her, and the net profits from the partnership were to be used for and applied to the equal benefit of plaintiff and defendant. Defendant commanded that plaintiff not obtain employment or he would leave her. Since 1952 defendant has collected large sums of money from companies and business dealings. Since December of 1975 defendant has dishonored the agreement, failed to provide support or maintenance, and refused her demands for an accounting. Special Term dismissed the complaint. The Appellate Division affirmed the dismissal of both causes of action. The case is presented on appeal to the New York Court of Appeals with the questions whether a contract as to earnings and assets may be implied in fact from the relationship of an unmarried couple living together and whether an express contract of such a couple on those subjects is enforceable.
View caseNoreen Nguyen obtained an advanced degree during marriage while her spouse supported the household. The court refused to treat the degree itself as marital property but examined whether it enhanced her net earning capacity for purposes of equitable distribution.
Anne P. Graham and Dennis J. Graham were married on August 5, 1968, in Denver, Colorado. Throughout the six-year marriage Anne worked full-time as an airline stewardess and contributed seventy percent of the financial support used for family expenses and Dennis's education. Dennis attended school for approximately three and one-half years of the marriage and obtained a bachelor of science degree in engineering physics and a master’s degree in business administration at the University of Colorado. The couple jointly managed an apartment house and Anne performed the majority of the housework and cooking. No children were born during the marriage and no marital assets were accumulated. On February 4, 1974, the parties jointly filed a petition for dissolution in the Boulder County District Court. Anne did not make a claim for maintenance or attorney fees. After a hearing on October 24, 1974, the trial court found that the education obtained by Dennis during the marriage was jointly-owned property. The court evaluated the future earnings value of the M.B.A. at $82,836 and awarded Anne $33,134 payable in monthly installments of $100. The Colorado Court of Appeals reviewed the trial court's decision in Graham v. Graham, 38 Colo. App. 130, 555 P.2d 527 and reversed it. The Supreme Court of Colorado then took up the case.
View caseYes. Compensatory damages for harm to earning capacity require proof of actual pecuniary loss with reasonable certainty. Evidence such as invoices, sales records, or vocational testimony must establish both the existence and amount of the loss.
Yes. Management testimony alone that losses likely occurred is insufficient. Concrete financial data such as cancelled contracts, profit records, or expert calculations are needed to support recovery.
Recovery is limited to harms suffered before death. Post-death projections of future earning capacity are not recoverable under survival statutes.
Yes. Courts assess a parent's net earning capacity when setting support obligations, using tax returns and expense evidence to determine the realistic monthly income available.
…of the parties. (f) The contribution by one party to the education, training or increased earning power of the other. (g) The earning capacity of each party, including educational background, training, employment skills, work experience, length of absence from the job market, custodial responsibilities for children and the time…