You can protect yourself against these types of claims by carrying adequate business insurance. 

Let’s take a closer look at each scenario. 

Acts Done on the Job 

While your employees are working for you, you are responsible for their actions. This responsibility falls under a Latin term known as respondeat superior. If you directed an employee to do something — or what they are doing is reasonably tied to what you directed them to do — you are liable for their actions. 

Depending on what happened and the employment laws in your state, a person who was injured by your employee may be able to sue either the employee or you. You may also be able to recover damages from your employee. However, since your employee probably doesn't have as deep of pockets as you do, you will usually be the one who gets sued by the injured person. And may not be able to recover anything from your employee. That's why it's important to have business insurance when you have employees. 

The exception to this guideline is if what the employee did is disconnected from the job. For example, if your delivery driver runs someone over while speeding to make your guaranteed delivery time, you are likely liable. If your delivery driver is speeding while in the truck but not on the job, you probably don't have liability since the incident isn't part of the delivery. 

Negligent Hiring 

Negligent hiring is when you hire the wrong person for the job and that decision ends up getting someone hurt. For example, an employee with a violent criminal past may assault a customer. Or, someone who faked their electrician resume may wire something incorrectly and start a fire. If you didn't take reasonable steps to know who you were hiring, a court could find you liable for the incident. 

Negligent Retention 

Negligent retention is similar to negligent hiring, but with employees you already have. For example, say you received multiple complaints about your delivery driver falling asleep behind the wheel and did nothing about it. If your delivery driver does it again and kills someone, you could be facing a wrongful death lawsuit. In this case, you’d need to rely on your business insurance coverage to avoid going out of business.