Quirky Question #213, Holiday Parties – Potential Sources of Liability

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Quirky Question #213

We are in the midst of preparing for our 2013 holiday party. We plan to schedule an evening event and intend to provide our employees and their guests with free food, entertainment, and alcohol; after all, we’ve worked hard all year and want to celebrate! How do we avoid risk while we host a fun party?

Dorsey’s Answer

While employer-sponsored holiday parties represent an enjoyable, and common, way for employers to express gratitude for employee dedication and contributions, they are by no means risk free, especially when alcohol is provided. Such gatherings may serve as the basis for a wide array of legal claims, including, but not limited to, discrimination and/or sexual harassment claims, social host or dram shop claims and personal injury claims, and premises liability and/or workers’ compensation claims. Although the viability of such claims will vary state by state, and may or may not be subject to a host of federal laws depending on the activity at issue, you and other employers should be aware of the following generally applicable principles.

First, you and other employers may face liability for sexual harassment or discrimination if party guests engage in unwanted or offensive sexual behavior, or make inappropriate comments based on the protected statuses of others, such as their race, national origin, or gender. The provision of alcohol exacerbates the probability of tasteless, and potentially actionable, behavior.

Second, you may face liability for dram shop and/or personal injury claims. Dram shop laws vary across jurisdictions, but generally provide injured persons with a cause of action against the individual or entity that caused the illegal intoxication of the person that produced the injury. Thus, if the employer is tasked with distributing alcohol at a holiday party and over-serves a particular guest or inadvertently provides alcohol to a minor who later causes injury (frequently in the context of an automobile accident), it may be exposed to liability. If you serve alcohol to a person who drives a company vehicle, the Company can be directly liable under a negligent entrustment theory.

Third, you and other employers may face potential premises liability or workers’ compensation claims if the party is at the office and a party guest sustains injury. Although these laws vary across states, especially those concerning workers’ compensation – which may exempt social activity-based injuries from coverage, or turn on whether attendance was mandatory -service of alcohol and use of Company facilities increases the risk of these claims.

Despite the risks associated with hosting a holiday party, there are a number of steps you can take to limit your exposure to liability.

Alcohol: Since you plan to serve alcohol at your party, consider taking the following steps:

  • Review your handbook and policies to determine whether your sexual harassment and discrimination provisions extend to employer-sponsored social events. If they do, remind employees prior to the event. If they do not, communicate to employees that appropriate behavior at the event is an expectation.
  • Hire a professional, licensed bartender or company to serve the alcohol to ensure that guest consumption is appropriately monitored and excessive intake is prohibited.
  • Attempt to moderate guest consumption of alcohol by limiting the amount of time guests can partake in the “open bar” or providing each guest with one or two free drinks, then switch to a cash bar or close the bar altogether.
  • Limit the types of alcohol served to low-content varieties; don’t serve shots or potent concoctions.
  • Have designated monitors and provide guests with cab vouchers or allow employees to seek reimbursement for such transportation to ensure everyone in attendance has a safe ride home.
  • Make sure to provide a variety of non-alcoholic alternatives.
  • Set a party end time and stick to it.

Location: Given that your party will take place in the evening and due to the risks associated with hosting the party at the office, plan the party at an off-site location. However, be careful about hosting parties at locations that otherwise restrict accessibility based on protected characteristics or are not easily accessible to persons with disabilities.

Invitations:  Make sure you do not indicate or otherwise suggest that attendance is mandatory or even encouraged. Moreover, since your party will take place in the evening (and presumably during non-work hours), do not compensate your employees for attending as that will suggest they are on the clock and that attendance is indeed mandatory. Finally, stick to neutral terminology, e.g., “holiday,” in party invitations and/or notices to avoid the implication that the party relates to a specific religion.

Entertainment and Décor: Stick to neutral decorations. In addition, make sure that the entertainment is accessible to all attendees and is entirely unrelated to work.

Food:  Ensure that a variety of food is served to accommodate all dietary and/or religious restrictions 

Gifts:  If you plan to provide gifts to your employees, do not do so at the holiday party as that tends to suggest that attendance is mandatory or that employees will forfeit a work-related bonus or their reward if they fail to attend.

Topics:  Employer Liability Issues, Holiday Parties

Published In: Labor & Employment Updates

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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