I don't think he means liable in the literal sense but in a figurative way: that permanent employee might lose out on a bonus, raise or future greenfield projects if they screw up. A consultant or contractor might not get their contract renewed or told to sod off, depending on the severity.

But you're right about the financial liability: I've never heard it happen; but what with Murphy's Law I'm still retaining a Liability insurance just in case it should ever happen to me.