Called "quats" for short, quaternary ammonium compounds are used commonly in hair conditioners, shampoos, and even lotions, to impart a slippery feel to the hair and skin. Quats are the chemicals that enable you to have a little dollop of conditioner and let it easily glide and be distributed throughout your hair. They also have anti-microbial properties and are commonly used as preservatives. There are a number of problems with quats, however. First, they are known to cause skin and respiratory irritation, and some people are highly allergic to them. Second, some quaternary ammonium compounds, like benzalkonium chloride, are phenolic and have been found to be endocrine disruptors, meaning they interfere with hormone function within the body. Third, they are toxic to aquatic life, so they're not good for the environment when washed downstream.
Some examples of quaternary ammonium compounds:
Grapefruit Seed Extract
Vegetable Oil Quaternary
guar hydroxypropyltrimonium chloride
Check out what this chemical safety database says about quats:
"Quaternary ammonium compounds can cause toxic effects by all routes of exposure including inhalation, ingestion,dermal application and irrigation of body cavities. Exposure to diluted solutions can cause mild and self-limited irritation. Concentrated solutions of quaternary ammonium compounds are corrosive and can cause burns to the skin and the mucous membranes. They can produce systemic toxicity due to their curare-like properties. They can also cause allergic reactions.
Mild to severe caustic burns of the skin and mucous membranes can occur depending on the agent and the concentration. Other signs may include: nausea, vomiting, abdominal pain, anxiety, restlessness, coma, convulsions, hypotension, cyanosis and apnoea due to respiratory muscle paralysis; death may occur within 1 or 3 hours after ingestion of concentrated solutions. Haemolysis and methaemoglobinemia have been reported infrequently."
Here is a report that the SCCS (Scientific Committee on Consumer Safety, an organization in the EU) did on a number of quats. The SCCS recommends that based on the skin reactions and toxicity seen in the studies, that concentrations of behentrimonium chloride shouldn't exceed 3% in a rinse-off product, and should be no more than .5% in a leave-on product.
Quaternary ammonium compounds may also contribute to the formation of a class of carcinogenic compounds called nitrosamines in the presence of certain chemicals. (Source)