Small Business Hit By Disaster – Is the Owner Liable?
As a business owner, you can be sure that if disaster hits, even while you are trying to get back on your feet, your business is going to be looked at closely by a number of people. For example:
- OSHA will be checking to be sure you had proper emergency signage and fire extinguishers.
- Customers are going to point to contracts you may have signed promising delivery of products or services.
- Employees’ families (and their lawyers) are going want to know if you had taken reasonable steps to assure the safety of their loved ones.
If you have shareholders, you’ll endure another level of scrutiny because of your fiduciary responsibility.
What will be their findings?
Whether or not you can be found deficient or even negligent will depend on the situation, of course.
In every case, though, a serious lawsuit can bring the company down just as surely as the disaster could have!
Perhaps you can’t protect yourself from the disaster. But you can take steps to protect yourself from legal fallout.
Three simple recommendations.
- Consult with your professional advisors about the subject of “emergency preparedness.” For example, have a meeting with your lawyer, your insurance agent and your HR advisor on the topic. Understand safety statutes that apply to your particular industry; professional associations can be of help, here.
- Take advantage of in-house expertise to draw up a simple Emergency Preparedness or Business Continuation Plan. Many resources are available to get you started, and your own staff members are likely to be more knowledgeable about vital functions than any outsider.
- Take reasonable steps to protect the business following your plan recommendations. These include safeguarding data (back-ups, redundant systems, off-site storage), having a plan to maintain essential functions (with appropriate role assignments and back-up assignments to fill in for people who are likely to not be there), and understanding the needs of employees who may be cut off from their families.
Yes, emergencies can happen. In the world of small business, perhaps it’s safe to say that emergencies WILL happen! It doesn’t follow, though, that an emergency needs to turn into a disaster.
Remember the Prudent Man rule.
Are you doing what a prudent person in your circumstances would be expected to know and do?
This article is not meant to provide legal advice. But if you identified some possible holes in your emergency planning, now would be a good time to take action to fill them. Following the recommendations above may protect you from being accused of negligence. More importantly, following them may actually shield the business from failure.