Widespread labor shortages can create several liability exposures for businesses of all sectors. In particular, these shortages often force employers to schedule fewer staff members for each shift (leaving them overworked) and resort to hiring lesser-skilled employees to fill job openings.

This culmination of exhausted and underqualified workers can increase the risk of employees cutting safety corners or making careless errors during their daily tasks, potentially resulting in workplace accidents. These accidents could harm or injure both employees and customers, creating major liability issues. Overworked and inexperienced employees may also be more likely to miss important project deadlines and cause service delays, contributing to disgruntled customers and associated liability problems. Additionally, staff shortages can make it more difficult for employers to maintain adequate workplace security, making them more vulnerable to property and inventory losses—which could result in liability troubles.

Here’s a closer look at how labor shortages have created elevated liability risks within specific industries:

  • Construction—According to the U.S. Chamber of Commerce’s Commercial Construction Index, 55% of contractors have reported a high level of difficulty in securing qualified workers. Although President Joe Biden’s administration seeks to increase commercial construction project opportunities through a $1 trillion infrastructure plan, uncertainty about the specific types of projects available has made it challenging for contractors to hire and retain workers. With nearly half of construction workers over the age of 45, the sector could face continued staff shortages amid growing retirement rates. Due to the nature of the construction industry, labor shortages can pose substantial liability risks by way of elevated (and more severe) job site accidents, project delays and decreased workmanship.
  • Manufacturing—The BLS reported that the manufacturing sector is currently facing over 800,000 job openings, highlighting a major labor crisis. While the Biden administration has allocated federal funding through several executive orders to help foster a new generation of manufacturing workers, staff shortages remain a pressing concern. To combat these shortages, some manufacturers have leveraged artificial intelligence instead of employees to complete daily tasks. On the other hand, some manufacturers have reduced their job requirements relating to criminal history, legal marijuana usage and previous work experience to expand their candidate reach. Yet, this change in criteria can lead to an underqualified workforce, increasing instances of job site accidents and subsequent liability issues. After all, the latest industry research shows that manufacturing employees with one year or less of job experience contribute to over one-third (35%) of worksite accidents and related insurance claims.
  • Trucking—According to the American Trucking Associations (ATA), there is currently a driver shortage of more than 80,000 positions—largely fueled by the aging workforce, a declining interest in the profession and certain industry barriers. Making matters worse, the ATA estimates 160,000 commercial driver positions could be unfilled by 2030. The driver shortage is so profound that the Biden administration’s infrastructure plan includes funding for an apprenticeship pilot program intended to encourage commercial driver’s license holders under the age of 21 to operate in interstate commerce.

Steps Businesses Can Take

To combat labor shortages, employers should consider the following guidance:

  • Increase pay. 
  • Offer additional benefits. 
  • Reward existing employees.
  • Limit business hours.