
How Do Labor Shortages Impact Business Liability?
Have you experienced more workplace accidents and errors recently? It might be due to the labor shortage that’s impacting businesses across the U.S.
What Factors Are Contributing to the Current Labor Shortage?
The United States is currently experiencing a record-high labor shortage. There are over 11 million open positions and only 6 million unemployed Americans—which means businesses would still need to fill over 5 million jobs even if every unemployed person got hired.
How did we get here? The roots of today’s worker shortage go back to 2020, when thousands of businesses shut down and laid off their workers during the pandemic. After businesses reopened and the economy improved in 2021, hiring efforts ramped up—but many people who left the labor force the previous year didn’t come back. According to the U.S. Chamber of Commerce, reasons for this include:
- Issues with childcare: Many childcare providers shut their doors during the pandemic, making affordable care challenging to find. Instead of searching for help, many Americans decided to stay at home with their children.
- Increased savings: Because of stimulus checks, increased unemployment benefits, and a decrease in overall spending, many Americans had more money in 2021 than in years prior. This extra cash meant less pressure to return to the workforce.
- Early retirement: 3 million Americans retired early due to the pandemic, lowering the overall number of Americans in the workforce.
- An increase in new businesses: Nearly 10 million Americans filed new business applications in the past two years, increasing the number of job openings.
Understanding the Labor Shortage by Industry
The labor shortage hasn’t affected every industry equally. The food service and hospitality industries have struggled to keep workers since early in the pandemic. Amid the Great Resignation, more employees have left these industries than any other in search of higher wages.
Other industries struggling to find workers include:
- Manufacturing: In April 2022, 40% of job openings went unfilled in the durable goods manufacturing industry.
- Construction: The construction industry will need to find 650,000 new workers on top of normal hiring efforts in 2022.
- Healthcare: Burnout and COVID-19 risks have contributed to the labor shortage in the healthcare industry, and it’s only expected to get worse in the coming years.
- Transportation: In October 2021, the American Trucking Association reported a driver shortage of 80,000 workers due to early retirements and workers leaving the industry.

The Connection Between Labor and Liability Risks
No matter what type of business you run, staffing shortages significantly increase your liability risks. Scheduling fewer workers and increasing hours can lead to exhaustion and burnout. And when tired workers cut corners, they’re more likely to make costly mistakes.
Here are a few risks that can arise from worker shortages:
- Workplace injuries: Tired employees who don’t have the proper skill set can make dangerous mistakes, leading to minor and major injuries. These risks are more pronounced in dangerous industries like construction and manufacturing.
- Missed deadlines and project delays: When you’re understaffed, it’s harder to keep projects on pace. These delays can create issues if you breach your contract and get sued by an angry client.
- Property damage or loss: If fewer people are watching over your business, your chance of property theft can increase. Plus, overworked employees might make mistakes that damage your equipment or other business property. Damaged or missing equipment can cause injuries and affect your ability to complete work on time.
- Customer injuries: Small mistakes, like forgetting to put a wet floor sign up or making a drink too hot, can cause serious customer injuries.
How To Deal With Staff Shortages
Here are a few ways to reduce risks, support your employees, and attract new staff during this unprecedented labor shortage.
Increase Pay and Benefits
If you want to attract new employees and keep the ones you have from leaving, consider increasing your pay and benefits. Employees who are happy with their compensation are less likely to pursue other opportunities. Additionally, skilled workers will be more inclined to choose your company over a competitor if you offer better pay and a comprehensive benefits package.
Focus on Onboarding and Training
If you can’t fill all your open positions, it’s crucial to properly train the employees you have. New employees should receive rigorous training to develop the key skills for their role, especially if they don’t have all the qualifications needed.
You should also provide regular safety training regardless of your employees’ experience level. Numerous studies suggest that safety training reduces injury and illness rates, which means you’ll have fewer employees out of work.
Not sure how to implement a safety training program? InSource can help.
Purchase Insurance
You can’t reduce or eliminate every risk during this labor shortage, but you can prevent financial loss with the right insurance policies. These include:
- General liability: If you face a customer injury lawsuit, general liability insurance can help you cover the costs.
- Workers’ compensation: With worker’s compensation insurance, you don’t have to worry about paying employees’ medical bills or lost wages.
- Errors and omissions: If you miss a deadline and get sued by an angry client, errors and omissions insurance will help cover lawsuit costs.
- Property: Damaged or missing property can increase liability risks, but you can prevent delays in repairing or replacing items with the right property policy.
- Auto: If a tired employee gets into an accident, your auto policy will help pay for lawsuit costs and damage to your company vehicle.
Address Your Risks With InSource
Are you unsure whether your current policies cover your liability risks? Turn to InSource. As a risk management agency, we can help you avoid coverage gaps and create a safer working environment for your employees.
Get in touch to learn more about our coverage options and risk control services.
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