In Moments of Transition, Lyta (who is not in the Corps) is trying to get a job as a commercial telepath.
Lyta: But you said I had the right background.
Employer: You do, but our insurance policy requires all telepaths engaged by our firm be current licensed members of Psi Corps. That indemnifies us against any lawsuits on the grounds of mental distress or invasion of privacy.
Lyta: I'm sure there's a way we can work this out.
Employer: No. If it were up to me, I'd give you the job, but I'm answerable to our attorneys and the board. They can't afford the liability.
Employer: I'm sorry. Perhaps in the future, when you rejoin Psi Corps, we can discuss this again.
There is something fishy going on here.
How does this "telepath misconduct insurance" work, exactly?
In Darkness Ascending, we learn a little more about it.
Company rep: It's an interesting idea, but we're a big company, Miss Alexander. And we employ a lot of telepaths who belong to the Psi Corps. They must be members of the Corps or our insurance wouldn't cover their activities. If I did what you asked, well, I'd violate our contract with the Psi Corps, and they could yank our people, and it'd put us at a substantial disadvantage.
Lyta: We can get you all the telepaths you need.
Company rep: But not the ones I want. Look, I understand your desire to create a Homeworld for telepaths. I'm not unsympathetic. But what you're asking is beyond the capabilities of my company. Or any others. You need someone with a lot more resources. And no contractual obligations to the Psi Corps. Good luck trying to find him.
This part makes a bit more sense -
Earth Alliance law prevents anyone from working "as a telepath" unless they are in the Corps (and prevents telepaths as working as anything else one way or the other). While it's not a criminal offense for a company to hire a telepath who is not in the Corps (and not on sleepers), to do so subjects a company to massive liability (more on this in a bit).
The Corps, meanwhile, acts as the union for telepaths (Dark Relations, p. 196, and elsewhere where telepath contracts are discussed). They set the rates of pay, benefits etc. for telepaths, which is how commercial and court telepaths have such a high standard of living in a world that discriminates against them in just about every other possible way. Keeping their people employed is a matter of life and death. Telepaths literally can't work as anything but as "telepaths."
So the Corps has an obligation to keep companies from cheating their people out of work by hiring rogue telepaths "under the table" at a lower price. (Not to mention how rogue telepaths are often abused, even murdered, by their employers.) So if a company is found to be hiring rogue telepaths (and at the very least, cheating law-abiding telepaths out of fair wages), it's a breach of contract, and the Corps can pull their people. They can say to the company, "sorry, we're not letting you hire telepaths again." And then, that company is screwed, because they need to have telepaths in order to conduct business the way it's done in the EA.
But what is this "telepath misconduct insurance?"
This is where it gets weird. In tort law as it has existed forever and ever, in order for a plaintiff to succeed in court, he or she must show damages. Actual damages. If the plaintiff can't show actual damages, the most they can recover is a "nominal" award, because they didn't actually suffer any real harm. I can't sue someone for some hypothetical harm that I may or may not have sustained, that cannot be determined one way or the other. I cannot sue someone because they were negligent, if their negligence resulted in no demonstrable harm to anyone. Sure, I have a loose brick in my steps, but no one tripped on it. (There are cases where people sue for other things, such as the walkway not meeting ADA standards, even if thy never even tried to use it, but that's not the same as ordinary tort law.)
The relevant tort laws here, as mentioned above, are "mental distress" and "invasion of privacy." So we're going to talk about those two, and what this has turned into in the Earth Alliance, when telepaths are involved.
The important thing to note is that telepaths don't look any different from normals. And if a telepath "scans" a normal, he or she doesn't feel a thing (unless it's a deep scan, which is covered under assault anyway).
Normals who are in the presence of telepaths (in the Corps or otherwise) have literally no way to know if they've been scanned or not.
Outside of weird B5 tort law involving telepaths, "invasion of privacy," as a tort, applies to real, tangible, visible harms, usually the publication of private facts - and only when those facts aren't of legitimate public concern. It's really hard for a plaintiff to collect on "intentional infliction of emotional distress" claims in general - if they do win (and this is pretty rare), it's because they can show the defendant also intended to inflict emotional distress on the plaintiff. (But since it's pretty easy to fake being "distressed" to make money in court, the bar set is really, really, really high, and the circumstances must be clear, extreme, and outrageous.)
So we have two possibilities here, since canon's not clear.
1. They're really just talking about the rare possibility that a rogue telepaths scans someone in their company/on a transport/on company property, finds something super private and super scandalous that's not "of public concern," and directly publishes this information (or gives it to someone else who publishes it, but it becomes known somehow that it was this rogue telepath that found the information, and that the scan happened in a context where the company could bear some liability for the telepath's actions). And it's so bad, that the scanned person develops PTSD from the revelation of this information or the fact they were scanned, or both.
This risk would be really small.
Or, since canon tells us the risk of liability is substantial:
2. Since normals don't know if they've been scanned or not, they can sue the company for having knowingly exposed them to rogue telepaths, who are presumed to be up to no good because they're already criminals and let's be honest, why is a company going to knowingly hire rogue telepaths? Sure, it saves them money, but subjects them to some substantial risk of liability. They're probably doing it to cheat someone, blackmail someone, etc. And so normals can sue and collect even if they cannot prove a scan, prove what information was "stolen," or prove that this information was actually publicly disclosed by the telepath. What would a court expect, that anyone who might ever have been in the presence of a rogue telepath disclose to the court all possible information telepaths "could have" taken, before they can bring suit? That would defeat the entire purpose.
This tort isn't "you published private facts that harmed me and are of no 'legitimate public concern'" - it's "you knowingly put me in the presence, or potential presence, or rogue telepaths who could have found out anything private or scandalous about my life, and who could potentially disclose this information" sometimes coupled with "and as a consequence, I developed PTSD."
That would explain why the risk of liability is so high. Everyone and her mother can sue, and they don't have to prove anything in court, other than "you knowingly hired these rogue telepaths, and I was in the presence of one of these people at some point, or reasonably could have been in the presence (or line of sight of) one of these people at some point."
Case closed - everyone who was ever there gets together in a class action and sues you out of business.
Insurance won't cover it, because they say, "you knowingly hired rogue telepaths in the first place - it's your fault."
Of course, if the company hires someone in the Corps, then everything's different. Telepaths in the Corps are not presumed to be breaking the law and cheating people. If someone does act out of line, the Corps will "handle it," and the normal company can say, "we followed the law, and bear no responsibility for this telepath breaking the law." If someone does sue them, and collect, insurance will cover it.
What's the upshot?
In the Earth Alliance, knowingly "subjecting" a normal to the presence of a non-Corps telepath -
even if that telepath literally does nothing to harm the normal -
can be the basis for a successful lawsuit.
A person himself - not his conduct - can be a liability.
Unless he's a normal, of course.