March Madness - Could Friendly Wagers Among Employees Put Your Organization At Risk?

by FordHarrison
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Executive Summary:  March Madness, Super Bowl, and Fantasy Football pools have become ingrained in the American workplace and seem harmless to many; however, permitting such activities creates a wide range of risks for employers, from productivity loss to discrimination and disability issues and even criminal penalties.  Newly allowed online gambling can also create headaches for employers and IT departments.  Before turning a blind eye or participating in the pool, here are a few risks with which employers should become familiar.

  • Illegal Moves – Gambling at work is illegal in many states and resides in a legal gray area in others.  Further, with more employers operating in multiple states and more employees working remotely, office betting pools may span state lines and may violate federal law. 
  • Blowing the Whistle – Because gambling is illegal, employers should also watch out for employees who "blow the whistle" on activities such as an employer's betting pool and then claim retaliation. 
  • Impact on Productivity – Although there is no legal liability, employees watching ball games during work hours can reduce productivity and potentially impact your bottom line.  Further, just a few employees streaming games on work computers can significantly slow your network, impacting other employees.
  • Employee Morale – While some managers believe office pools are good for employee morale, be aware that some employees may object to them.  An employee who objects to gambling on religious grounds may bring a hostile work environment claim if co-workers – or worse, supervisors – harass or ridicule the employee for not participating in the pool. 
  • Disability –  While the Americans with Disabilities Act (ADA) specifically exempts gambling addiction from its coverage, an employee with gambling problems may suffer from other medical conditions, such as depression or mental illness, which may be covered by the ADA or state law.  Compulsive gamblers may have other problems at work, such as borrowing money from co-workers, being distracted from work, and attendance problems. 

Online Gambling: An All-Season Pastime

Three states, New Jersey, Delaware, and Nevada, have approved online gambling.  Ten states, including California, Colorado, Hawaii, Illinois, Iowa, Louisiana, Massachusetts, Mississippi, New Jersey and Pennsylvania, are considering measures that would legalize or expand online gambling in some form.  Online gambling permits individuals to gamble from anywhere, even their smart phones.  Employees may attempt to gamble on work time or from their employers' computers.  The shift to online gambling is likely to create issues for employers, who may have turned a blind eye to Super Bowl pools or NCAA brackets, but must now decide how to address gambling year round.

The Best Defense is a Good Offense

If employers decide to take a chance on employee betting, they should institute clear policies.  The policy should:

  • state that gambling is illegal;
  • describe acceptable and prohibited behaviors;
  • state that employees can be disciplined for violating the policy; and
  • identify all work areas where betting is prohibited, including offices, cafeterias, and parking lots. 

Employers should also include a mechanism for employee complaints and be prepared to handle them in the same way as any other complaints.  Enforcement of the policy is key.  Employers face a greater chance of liability when they have a policy but do not enforce it fairly.

Employers' Bottom Line:

Employers should be wary of turning a blind eye to workplace gambling, including bracket pools.  Depending on state laws, employers who choose to allow gambling at work should institute policies defining acceptable and unacceptable behavior and should discipline violators.  The Law360 article, Know Your Risks Before You Make Your Bracket, http://www.law360.com/employment/articles/425382/know-your-risks-before-you-make-your-bracket, (subscription required) written by the authors of this Alert, Salvador Simao and Joanna Rich,  provides a more detailed discussion of the risks of office betting pools. 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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