employers' liability
Definition
Employers' liability refers to your legal responsibility as a business owner to compensate employees who get injured or become ill because of their work. If an employee suffers harm due to unsafe working conditions, faulty equipment, or your failure to follow proper safety procedures, you can be held financially responsible for their medical bills, lost wages, and other damages. Most businesses carry employers' liability insurance specifically to cover these costs if a claim is made against them.
Example
If one of your warehouse workers throws out their back because you never replaced a broken hand truck you knew was dangerous, that employee could sue you for their medical expenses and the income they lost while recovering.
Watch Out
Many small business owners mistakenly believe that workers' compensation insurance fully covers them, but employers' liability is actually a separate layer of protection that kicks in when an employee sues you directly rather than just filing a workers' comp claim.
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This definition is for informational purposes only and does not constitute legal advice. Please consult with a licensed attorney for legal guidance.