This post originally appeared on Entrepreneur.com - #Growing Your Business
Workers’ comp is designed to protect employees, so what is there for employers to learn?
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The majority of states in the U.S. have a workers’ compensation system that’s a great safety net for both employees and employers. Workers get compensated for the loss of income and medical expenses, while employers are protected against expensive and often lengthy personal-injury lawsuits. Workers’ compensation cases, with limited exceptions, do not require you to prove who is at fault, and usually, the employee loses the right to sue the employer for damages due to pain and suffering. Rather, it typically covers random cases of ordinary negligence in the workplace.
However, this employer immunity against being sued is not absolute. As with all rules, there are exceptions, and this is where employers and business owners must be cautious. A successful personal-injury lawsuit due can be costly, and in some cases, cost you your business. So, when can your employee sue you for injuries on the job?
1. You deliberately or intentionally caused an injury to your employee
Workers’ compensation covers your workers against damages from an injury that is job-related. If you lose your temper and the worker sustains an injury due to a physical altercation between the two of you, it does not qualify as a “work-related injury.” In legal language, it is referred to as an intentional tort. It could even include intentionally inflicted emotional harm.
A single blow that causes your employee to fall to the ground and hit his head, for example, could cause brain damage with life-long consequences and expenses to your employee. You could face a personal-injury lawsuit that might close down your business, and that’s without even considering the consequences of your criminal trial.
2. Injuries caused by your non-compliance
There is a comprehensive set of state and federal employment and occupational health and safety laws to protect employees against sustaining injuries. If you, as an employer, choose not to comply, you will be personally liable. In some states, for example, if you remove the guards on a power press and your employee suffers an injury to his or her hands, there is a specific exception that you as the employer can be sued directly.
Generally, if you are aware of safety and health risks (and you should be if you are in the business) and you deliberately cut corners to save money and fail to protect your workers, you are setting yourself up for an expensive lawsuit. For example, if you fail to provide protective gear against asbestos exposure or against hearing loss from constant exposure to loud noise in your manufacturing plant, you might be held personally liable for reckless conduct.
These situations might end up being the most expensive “savings” ever. In essence, you might end up closing your doors after multiple personal-injury lawsuits against you.
3. Toxic torts
Sometimes, workers are required to work with toxic and volatile chemicals, and they’ll generally be protected by workers’ compensation. Still, they can occasionally be successful with a claim outside of workers’ compensation based on toxic tort law.
In a recent case, an employer instructed his employees to work with highly volatile chemicals. The specific chemicals had a history of exploding, and the employer was fully aware of this. One of the workers died in a subsequent explosion, and another was seriously injured. The Supreme Court held that the facts of that case overcame the employer’s immunity against being sued directly.
4. You are the manufacturer of the equipment that caused the injury
Let’s say you employ someone as a machine operator on a construction site. A chain breaks on the machine, and a heavy structure falls on your employee. The employee might have a case against you if you are also the manufacturer of the machine or the chain and you knew of the danger and didn’t warn your employee. In terms of the healthy employee-employer relationship, the employee should be successful with a workers’ compensation claim. In addition, he or she might have a product-liability case against you in your capacity as the manufacturer of the defective product.
5. You cover up the injury or deny the claim
If you cover up your employee’s injury or the connection between the injury and the workplace, and further damages occur as a result of your cover-up, you may not have the protection of the workers’ compensation system and could be liable for a personal-injury claim against you directly.
6. You decided not to take out workers’ compensation insurance
The law requires you to have workers’ compensation insurance to protect your workers. If you decide not to take insurance, you give up the protection against personal lawsuits that is available to you. Besides it being against the law, it can easily mean the end of your business. Your workers can now sue you personally if they are injured on the job, even in cases of ordinary negligence. Not only will you be sued for their financial losses, but you can also face claims for current and future non-financial losses.
7. The injured person is not technically your employee
Technically, you are not an “employer” if you “employ” an independent contractor to perform certain tasks related to your business. Therefore, you will not qualify for workers’ compensation immunity if that person sustains a work-related injury while executing his or her duties.
Likewise, in some states, some professions — like commission-only salespeople or certain agricultural and seasonal workers — are not considered employees for the purposes of workers’ compensation. If they get injured while working for you, they cannot claim workers’ compensation, but if they can prove that the injury was due to your negligence, he or she can sue you directly for personal-injury damages.
Non-Work-Related “Workplace Injuries”
Let’s set aside personal-injury lawsuits for a moment. There are other actions that you can be sued for that could have serious consequences for your business, such as conduct that amounts to sexual harassment or discrimination based on race, religion, marital status, gender and so on. Any lawsuit can be very costly and time-consuming, with a significant impact on your business.
Related: Workers’ Compensation 101
Workers’ compensation laws vary from state to state, and not all of these individual cases will necessarily mean that you have to close your doors, but potential personal-injury lawsuits are never worth the risk.
Whatever the cause of the injury, in most cases, the indirect cost to your business often exceeds the actual cost. Loss of productivity, training new workers, damage to your property and/or to your business reputation all contribute to the bottom line. And don’t forget about the costs of fines and penalties for non-compliance with state and federal laws.
If you are facing a potential personal-injury lawsuit, speak to an experienced personal-injury lawyer as soon as possible. Besides the liability for damages, you may be fighting for the future of your business.