Understand your legal liability of employee injury beyond workers’ comp

Employer’s liability protects employers from the legal liability arising out of an employee injury that is not covered by your workers’ compensation policy.

Smart Business spoke with Andrew Rowles, vice president at SeibertKeck Insurance Agency, about this coverage, laws and court decisions on Ohio employer’s liability.

How does Ohio employer’s liability help cover this exposure?

At one time, workers’ compensation was the sole remedy for an insured employee in Ohio, but over time the courts have eroded that.

Today, employees can sue for damages arising from employee injuries if the employer intended to cause injury or knew or should have known the injury was substantially certain to occur.

Employers also can be sued for:

  • Care and loss of services, such as the spouse of an injured employee suing for the loss of family income.
  • Consequential injury to a family member of the employee, such as the spouse of a severely injured employee suffering a heart attack or nervous breakdown upon learning of the injury.
  • Third party over action is where an employee is injured and that employee makes a claim against a third party, such as the manufacturer of the equipment that injured them. That third party then comes after the employer to recover funds for the employees’ claim.
  • Dual capacity claims. If an employer is the manufacturer of the product that caused the employee’s injury, it can be liable not only as an employer but also as a manufacturer.

These exposures aren’t covered by Ohio workers’ compensation and are excluded by the standard commercial general liability policy, leaving the insured with a ‘gap’ in coverage.

It’s important to realize, though, that employer’s liability stop-gap provides some coverage, but only where permitted by law.

How have recent laws and court cases changed this coverage and added protection for employers?

In 2005, the Ohio legislature passed a law that requires employees to prove the employer acted with deliberate intent to cause injury to the employee.

In 2010, the Ohio Supreme Court upheld the law and confirmed its constitutionality. This case is a rare instance where employers have gotten more protection, not the employee.

In March of this year, the 2010 ruling was upheld in Hoyle v. DJT Enterprises. The case affirmed that plaintiffs must prove that the employer acted with deliberate intent to cause injury, disease or death, for a civil action based on an employment intentional tort.

While the Hoyle decision maintains the existing conditions for Ohio business owners and keeps Ohio in line with the majority of jurisdictions that recognize workers’ compensation as the remedy for employer injuries, there are some points to consider:

  • Most liability policies exclude deliberate intent, so there is no indemnity coverage for employment intentional tort claims.
  • As a practical matter, employees will be limited to workers’ compensation remedies for their workplace injuries.
  • Even with this decision, employers still face potential litigation by injured employees. Keep in mind that employer liability coverage forms typically provide only defense expense coverage for allegations of intentional injury.

An enhancement endorsement could provide indemnity coverage for dual capacity claims and for unforeseen claims that fall within coverage definitions.

Considering the ruling, it might be a good time to sit down with your agent to make sure you understand your employer’s liability coverage and have adequately taken all of the risks into account.

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