How much personal protection does employees and other business owners have if business is sued?

The owner of the business is sick. Clients have paid for services that are not being rendered due to the owner being sick. The owner is the only one who handles most of the day to day operations. Everyone else is in the dark when the owner is not there. Who is liable if the business is sued. Can other officers or employees be personally sued. Not sure if the business has insurance.

Asked on July 25, 2010 under Business Law, Georgia


M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

How the business is formed will have a bearing on the outcome of your question.  You do use the word "officers" so is the business a corporation?  Generally, parties form corporations to protect them from personal liability. The limits of collecting on a judgement from a lawsuit are limited to the assets of the corporation.  There are times when people try and sue the officers individually and "pierce the corporate veil" but that is difficult to do. The "regular" employees are not generally drawn in to the mess.  As for the insurance, dependig on what kind of business it is it may be required under the law, but not necessarily for what is going on.  That would be a different type of insurance.  I would urge you to have someone close to the owner urge him to relinquish his hold on the company for the benefit of all before it is too late.  Good luck. 

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