Small Business Brief


A Brief Guide to Employer Liabilities

As a small business owner, you may not be clear on who is responsible for your employees actions. Learn more about employer liabilities with this quick guide.

Lawsuits against businesses happen more often than many people realize. They cost the company money and can severely damage their reputation.

If you’re a business owner, then it’s your responsibility to know about employer liabilities.

By knowing what you’re liable for, you can work to prevent or reduce the chances of lawsuits against you or your business.

Keep reading to find out about the primary ways a business owner is liable.

Hiring Liabilities

Your liability as a business owner starts during the hiring process. You need to do background checks on all of your employees, and make sure that you’re not putting customers or other employees at risk because of who you’re hiring.

For example, if a daycare worker abuses a child and it’s found that the employer knew they had a criminal record involving child abuse, then that employer will be found liable.

They knew putting that person in that position gave them the ability to commit a crime which they had a known history of doing.

Work-related Employer Liabilities

Some jobs are more dangerous than others, such as those working in the manufacturing or construction industry. However, there are problems that can arise in any workplace which can harm its employees.

As an employer, you are responsible for making sure that your employees can safely perform their jobs. There need to be safety protocols in place, and equipment that protects employees.

You’re also responsible for the emotional safety of your employees. That means having sexual harassment policies in place and following through with complaints. You should also provide regular training.

If there is a problem, you can avoid legal trouble by showing that you have policies to protect employees and provided training to prevent such incidents.

A Word on Frolics and Detours

When an employee is involved in a situation in which someone else or someone else’s property is damaged, you as the employer may be liable. There are two important legal terms used to describe employee actions that result in damages: frolics and detours.

A frolic is when an employee uses company property for their own use and acts completely on their own accord. They are not acting under your direction and may even be acting against your direction.

An example of a frolic would be an employee using a company car after work to go out drinking who then hits a pedestrian. Because you didn’t tell them to drink and drive and they weren’t doing anything work-related, you would most likely not be liable.

Detours are when an employee is acting under your direction and may deviate slightly from that path but are ultimately following orders.

Using the previous example, if you encourage employees to take clients out for drinks and they hit a pedestrian while driving home drunk in the company car, you may be liable. They were working.

Keep in mind that every situation is different. If you have a specific situation that you’re facing, you’ll need to contact a lawyer to learn more about your legal responsibilities.

Get More Business Advice

Hopefully, you now have a better understanding of employer liabilities so you can avoid getting into any trouble.

If you want more advice, check out our blog where you can find loads of information on small businesses.