The holidays are often a time where employers sponsor or cover some costs associated with company holiday parties. While many employers view these as an opportunity to enhance morale or to build comradery in the workplace, there are a number of potential pitfalls that can make these events an opportunity for inappropriate behavior that can lead to employment claims or claims by third parties due to injuries suffered during or after such an event. When planning and managing the event, business owners should be wary of the following:
- Take steps to prevent sexual/gender-based harassment and hostile environment claims:
- Review your Employment Handbook Policies to make sure that employer-sponsored social events are covered.
- Prior to holding the actual holiday event, employers should review, and if necessary amend, their workplace harassment policies to specifically include employer-sponsored social events or parties. Some employers may choose to go so far as providing specific examples of conduct or activities at holiday parties that employer finds to be unacceptable. Employers should also remind employees that only appropriate gifts should be exchanged with co-workers - this could apply to both type and dollar value.
- Holiday activities should be appropriate to the workplace. In planning any employer-sponsored holiday party, management should avoid events or activities within an event that could create a romantic or sexually-suggestive situation, such as hanging mistletoe. While such events and activities may be a holiday staple for some, they could place others in a very uncomfortable position that leads to claims or complaints.
- Allow non-employee guests to attend. Although the addition of guests may increase the overall cost of the event, employees may control their behavior or be less likely to make offensive statements or take offensive actions if accompanied by a spouse or significant other.
- Be Proactive in Avoiding Potential Alcohol Related Claims:
- Beware of liability associated with alcohol consumption at employer-sponsored events. Although employer liability for injuries caused by attendees at employer-sponsored event is different from state to state, employers could be liable under theories of common law negligence, vicarious liability, social host or "dram shop" liability (a type of liability that holds the provider of alcoholic beverages to someone who is obviously intoxicated liable for any injuries that those individuals later cause), and more.
- Reduce the risk of alcohol related accidents or limit liability. Employers can limit their liability and manage risk more effectively if they hold their holiday event at a restaurant or some other off-site location. If the employer is not the holder of a liquor license and alcohol is served by professional bartenders at the party, the employer reduces its risk of the types of liability discussed above. Alternatively, if the company is adamant about holding the event at its office or business location, it is recommended that they hire a professional bartender or caterer for the event to prepare and serve any alcoholic beverages.
- As part of this process, the professional bartender or caterer should produce written proof of liability insurance and be advised, in writing, not to serve drinks to anyone who is obviously intoxicated or impaired. Another alternative would be to provide drink tickets that would limit the amount of alcohol that a person could consume during the course of the event. Limiting each individual to no more than two drinks is an acceptable way to manage the volume of alcohol consumption in which an individual may participate. Finally, employers may arrange for alternative transportation by shuttle, Uber, Lyft, or some other service to make sure that any inebriated employee or guest does not drive their own vehicle away from the event.
- Employers should also remind employees and encourage them to be aware of employees who are intoxicated or impaired as a result of consumption. It is better if the spotters are members of management so that they have adequate authority to oversee the behavior of subordinates.
- Minimize the Risk of Worker's Compensation Liability:
- Although Worker's Compensation Liability varies from state to state, benefits may be available to employees who are injured during, or because of, an employer-sponsored event. To create a clear expectation that the holiday party is not part of an employee's job, that there is no specific business purpose for the event, and that attendance is not mandatory, the employer should communicate so in writing - creating a clear expectation in the minds of employees that the event is not one that employees are required to attend. A second way to minimize the risk of Worker's Compensation Liability is to host the event off of the employer's premises. Hosting the event off-site creates a clear line of distinction that the event itself is not one that is part of employee work functions.
- Another way to minimize the risk of Worker's Compensation exposure is to confirm that the restaurant or venue at which the event is held are properly licensed and carry sufficient liability insurance. Third party licensing and insurance reduces risk to the employer because licensed establishments are subject to inspection and should have sufficient insurance coverage to cover any event related losses - or at a minimum will provide some contributory coverage to any exposure to the employer.
- Prevent Wage and Hour Claims by Non-Exempt Employees:
- Like Worker's Compensation exposure, exposure to wage and hour claims for hourly employees could arise if the employer does not clearly inform, in written communication, that attendance at an off-site office party is voluntary. Other methods to clearly draw that distinction would be to hold the party outside normal business hours; to avoid engaging in any business during the event which may include discussion about business matters, year in review, and distribution of bonuses or performance awards; or asking hourly employees to perform any specific functions at the party. While the danger of FLSA claims has been lessened by recent Federal Court decisions, aggressive plaintiff's counsel continue to look for opportunities to pursue these claims because of the statutory attorney fees involved in such actions.
Should you desire to review or create a policy that covers the issues raised by holding company holiday parties, please do not hesitate to contact Brian R. Redden, Robert J. Gehring, or Robert G. Hyland .... and Happy Holidays.