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Employee Liabilities: Protecting Your Company

Employee liability is often underestimated. This is because employee liability risks can be hard to quantify and it’s difficult to know what the true cost of employee risk exposure will be. However, employee liability risks can have a big impact on your company’s bottom line, so it’s important that you’re aware of them and how they might affect your business. We’ll go over some employee liability risks and how to protect yourself from them in this blog post!

What are employee liabilities?

It is important to understand what liabilities could affect your business if an employee does not meet their responsibilities. This could include missing deadlines, poor quality of work, or even product liability claims if the business sells a defective good that harms consumers.

Employee liability can be defined as a potential claim against an individual’s personal assets if their actions cause harm to a third party. Employees have the responsibility of maintaining quality work throughout the duration of their contract, as well as ensuring that they are not putting your company at risk by neglecting any task or procedure that could lead to loss.

If you find yourself in a situation where business assets are being damaged or you suffer a personal injury as the result of an employee’s actions, it can be difficult to determine what your next steps should be. This is why we recommend consulting with an attorney who specializes in employment law at the first sign that any aspect of your business could lead to liability and loss.

  • Negligence
  • Intentional wrongdoing
  • Product liability
  • Assault
  • Negligent hiring
  • Discrimination

If you work with a lawyer who specializes in employment law, they can help to determine which employee liabilities pose the biggest risk for your business and how to go about removing or minimizing these risks. If your company is successful at mitigating liability before it becomes an issue, you may avoid paying expensive legal fees altogether.

Are employees financially liable for mistakes?

Employees are not financially liable for mistakes that they make in the course of their employment. This is true even if an employee makes a mistake because he or she was negligent, broke a rule, did a poor job, etc., and it causes financial harm to you as the employer.

Employees have no liability for errors they make while performing services on your behalf. This is true even if they are negligent, broke rules, or did a poor job and it causes financial harm to you as the employer.

Employees also have no liability for bad results that were caused by circumstances beyond their control (for example, an injury at work). Generally speaking, employees cannot be held liable for damages resulting from errors made while performing services on your behalf.

Employees do not, however, insulate you from all liability if they make a mistake while working for you. For example:

  • If an employee is acting outside of the scope of his or her employment when he makes a mistake and it causes injury to someone else who is not associated with your business, you could be held liable.
  • If an employee breaks a law while performing services for your business, and that action results in harm to another person or their property, you may also have liability. This is especially true if the actions are criminal in nature (for example: driving under the influence of alcohol).

Who is liable for employee negligence?

employer liability

Employers are responsible for the negligent acts of their employees. If an employee is acting within the scope of his or her employment, then it is likely that he/she will be liable in a lawsuit filed against him/her by another party. This means that if you hire someone to hit tennis balls into your net every day and they slip and fall on the court, you are liable for their injuries.

Employers can still be held liable even if they don’t know about an employee’s misconduct (for example, when your manager drives drunk to work one day). However, employers will not be responsible for employees’ actions that were taken outside of the scope of employment or while off duty.

Employers will also be held liable if their employees are working under an employment contract that requires the employee to indemnify or hold harmless the employer for any injuries caused by the negligence of other employees while performing job duties. This means that you would have to pay your own legal bills and defend yourself in a lawsuit, even though it is the other employee who is actually at fault.

Employers can also be held liable for negligent hiring or retention if they hire an incompetent worker that causes injuries to others and/or fails to properly train employees so that they do not cause damage while performing job duties. This includes sexual harassment training, which must be provided every two years in the state of California.

Is an employer responsible for an employee's injury?

Yes. An employee will be liable for negligent acts committed while on the job, but an employer is also responsible if their employees are working under employment contracts that require them to indemnify or hold harmless the employer for any injuries caused by other employees negligence during job duties.

Job-related accidents or misconduct

Job-related accidents and misconduct do happen in many business settings, but employers should act quickly to protect themselves when these situations arise.

When an accident happens or misconduct occurs in your business, you must determine what information you can release and to whom without violating the privacy of the individuals involved. This includes knowing how much detail is appropriate for people who were not directly involved with what happened. You also need to know how much information you need to provide about the situation to comply with applicable laws. The law requires that you handle this type of information carefully, through careful planning and thorough compliance procedures.

With an effective plan for employee training on privacy policies and responsibilities surrounding personal data, employers can better protect themselves from legal liability should a job-related accident or misconduct situation arise.

If you are an employer in the job-related accident or misconduct industry, share with us how your company protects itself from potential legal liability when these situations happen in your business setting.

Understanding negligent hiring

Negligent hiring is when a company fails to do a background check on someone they hire, and that person goes out and does something harmful or illegal. The employer will be held responsible for the acts of their employees in this scenario.

Negligent hiring is easy to avoid by doing a thorough screening process before you hire anyone. This can take some time but it’s well worth the effort.

When hiring employees, it’s important to do a thorough background check on them before you make any final decisions. Many businesses hire new employees without knowing if they have been involved in criminal activities or other harmful behavior which can put your company at risk for a negligent hiring lawsuit.

Negligent hiring is an issue that employers need to be aware of. It happens more often than you might think, and by taking the time to do a proper screening process on potential employees it is possible to avoid hiring someone who will commit harmful acts against your company in the future.

What does vicarious liability mean?

Vicarious liability is when someone is held responsible for the actions of another. For example, if a company hires an independent contracted building worker and they get hurt on the job while working at your business, you might be held accountable even though you had no control over what happened to them since it was not directly related to their employment.

Vicarious liability can involve many different types of situations. Rather than being a direct form of employment, it is more about the actions that took place at work and how they affected others in your company even if you were not directly involved.

When someone else does something harmful or illegal while working for you as an employer there are different ways to protect yourself from potential legal liability depending on your company’s size, the nature of the incident, and other factors.

When should you seek legal advice?

Its best practice to seek legal advice before an incident, however, if an incident does happen there are several steps you can take to protect yourself and your company.

Having sound legal advice will help you understand your liabilities and put together a plan to protect yourself.

Many of the larger companies have in-house legal teams, while some smaller businesses may not need such extensive support. However, it is still important for small business owners to seek expert advice when required as they might be unaware of their responsibilities and how best to avoid violations from occurring.

Legal advice may be sought in a few different ways:

  • Seek legal help from a solicitor, barrister, or public notary for any specific questions you have about your obligations and liabilities under Australian law.
  • A business adviser can also assist with this process if needed. If they are familiar with the laws surrounding defamation they can help advise you on the best course of action to take in your situation.
  • You can also seek a legal opinion from an expert who specializes in defamation law and online reputation management. This has been beneficial for many business owners when they have had questions about their liabilities surrounding social media usage or how to best protect their brand.

By seeking legal advice early, you can put yourself in the best position to deal with any issues that may arise and avoid possible litigation or fines if found guilty of defamation.

How do I protect myself from liability?

There are several ways you can protect your company from liabilities, such as:

  • Hiring experienced lawyers to draft employment contracts
  • Drafting a non-compete agreement for employees who work with sensitive information or trade secrets of the business. This ensures that your company’s most valuable assets will not be disclosed to potential competitors -Ensuring that all employees are aware and understand their legal responsibilities when it comes to retaining and deleting company information once a contract is completed.
  • Creating an HR system that ensures employees are properly trained for their positions, have the right work visas where applicable, and create regular checkups with managers/supervisors who can answer questions about any legal compliance issues or provide documentation if there were ever a need. Additionally, this process can also help managers/supervisors spot potentially problematic employees early on, or prevent them from breaching contracts in the first place.
  • Implementing policies for how to handle sensitive information – like trade secrets and client confidentiality agreements. This ensures that your company’s most valuable assets will not be disclosed to potential competitors.

How outsourcing can reduce employee liability almost zero

If you looking for the simplest way to reduce employee liability then outsourcing is the answer. While it is true that you are losing some control over your business but on the flip side, everything can be managed remotely at a fraction of the cost of hiring full-time employees.

When an employer wants to outsource their work then they will look for someone who has expertise in handling similar responsibilities and offer him or her competitive rates, which is much lesser than the average salary paid to employees within the company.

Though there is indeed a chance of violating certain labor laws but most companies are hardly scrutinized by their outsourced workers. It might be because they don’t have enough time or resources for this purpose. Therefore, many employers choose to outsource over full-time employees.

Companies like MySource Solutions help you with outsourcing your work. They take care of all the hassles and provide for security measures that are required to keep employees safe.


In conclusion, there are many different ways you can protect yourself and your company from employee liability. You just have to be aware of these issues that might arise, and take the necessary steps to prevent them before they happen.

Some key points:

  • You need a clear understanding of what is expected of each employee at all times. This is a good way for you to avoid any unwanted surprises.
  • Be consistent in the application of your rules and policies, or else employees might get confused about what is expected from them.
  • If certain tasks need to be done by an employee, make sure these tasks are clearly defined so there is no confusion later on if the task is not completed.
  • You might want to consider making a contract with your employees that clearly outlines what is expected of them and the consequences if they fail, for it to be legal.
  • Last but not least, as an employer, you have a responsibility to protect yourself from any issues or claims made by your employees so you need to be aware of the laws in your state and what they protect.

As you can see, there are many different ways that employers can protect themselves from liability claims by their employees. It is important to take precautionary measures when hiring new people so for this reason it might be a good idea to hire an HR consultant to help you out with this process.

If you are interested in eliminating your employee liability, cut costs, and improve productivity contact us today:

About MySource

MySource Solutions is a leading professional outsourcing provider with headquarters located in Kansas City, MO and our operational team located in Cebu, Philippines. Established in 2017, MySource was founded by three veteran executives from the managed services and risk management industries that saw an ever increasing need to support the small business owner by providing crucial back office support services. 

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(KW: employer liability, employee’s acts, respondeat superior, legal theories, vicariously liable, employer’s behalf, authorized act, third parties, legally responsible, paid attorney advertising, employer liable)