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The holiday (party) season is coming: Plan now to minimize the risks

by Craig M. Borowski

The holiday season is almost upon us. Employers often use this time of year to show their appreciation for employees’ hard work and to celebrate with them in the workplace. Unfortunately, however, even an office party planned with the best of intentions can create legal liability for your company or possibly turn tragic. Drunk driving, inappropriate conduct, and other misbehavior can quickly ruin holiday spirits. Moreover, a bad experience or an inappropriate situation easily can destroy whatever goodwill and appreciation the party was designed to convey.

Most employers are prepared to accept some degree of legal risk to realize the benefits of celebrating a job well-done throughout the year with their employees. Even so, taking some simple practical steps can minimize the potential risks. Here are five tips for avoiding holiday-party liability.

Remember that off-duty parties can lead to harassment claims
It isn’t surprising, given the prevalence of sexual harassment claims year-round, that employees are increasingly asserting claims based on alleged sexual harassment by coworkers at holiday parties. Inappropriate behavior or offensive statements at the party by coworkers (or, worse yet, supervisors, managers, or officers) can form the basis for employer liability under various federal and state laws.

To reduce the chances of that occurring, you should first consider setting a tone of moderation before the holiday party. That can be done through internal communications and memos, pamphlets, paycheck inserts, and meetings reminding employees to be responsible, act professionally, and understand that misbehavior at employer-sponsored functions is against the rules and will not be tolerated. You also may want to use the party as an opportunity to issue a global reminder of your antidiscrimination and antiharassment policies. To that end, sending a memo or another type of communication reminding employees of your policies and providing them additional copies of the rules may be well worth the effort.

Once the party begins, you should have leaders in the organization attend and provide oversight. While having the “HR police” patrol the party may dampen spirits, having key company leaders in attendance to set an example and look out for and react to inappropriate behavior is important. Employers that leave holiday parties unchecked in this regard run a significant risk.

Remember that some spirits can destroy others
Many hosts serve alcohol at holiday parties. The holiday party season amplifies the threat of drunk drivers. The safest approach, of course, is not to serve alcohol. Beyond that, however, you can take several steps to limit your liability for overindulgence by employees.

  • Provide a limited number of “drink tickets” or vouchers to employees and guests in an effort to limit consumption. Do not have open bars.
  • Have taxis, car services, or other arrangements in place and available free of charge for anyone who may need a safe ride home from the party. The cost of a ride pales in comparison to the immeasurable cost of a drunk-driving tragedy.
  • Hold parties off business premises and shift the responsibility for serving alcohol to liquor licensees and professional bartenders. Do not make employees responsible for serving drinks to coworkers.
  • Reduce the risk of overindulgence by avoiding hard liquor entirely and serving only beer and wine along with a variety of nonalcoholic beverages so employees have a choice.
  • Schedule the party to last only a few hours and close the bar at least one hour before the function is scheduled to end.
  • Schedule the party on a weeknight when employees presumably are less likely to overindulge.
  • Provide additional entertainment to discourage drinking from becoming the central focus of the event.

Ensure that adequate insurance is in place
Before having a holiday party, you should ensure that sufficient insurance coverage is in place should something unexpected happen. It’s far easier to make that determination in advance than to fight over coverage after the fact.

Also, keep in mind that workers’ compensation protections may or may not kick in. In determining whether an employer is liable for an employee’s injury during a social event, courts often evaluate whether the social function advances the employer’s business interests and whether attendance at the function is within the scope of employment. That consideration affects whether the employee can sue his employer directly or whether his remedies are limited to the benefits available under the Indiana Workers’ Compensation Act. In most cases, that limitation favors the employer, but the facts and circumstances of a particular situation may cause you to forfeit your workers’ comp protections.

Make sure the event is truly voluntary
In general, an employee who is required to attend a party and is injured or harmed is going to have a better legal claim against her employer than an employee who wasn’t required to attend but chose to do so voluntarily. For that and other reasons, you should make sure holiday parties are entirely voluntary (in both theory and practice).

Of course, there’s also a practical employee relations issue to think about. Many employees may not want to attend for religious or other reasons and may feel uncomfortable if they are forced to go. To that end, you should remember to respect employee diversity. Holiday parties should be denomination-neutral.

Make wise decisions about guests
Whether to have parties structured for employees only or employees and guests is sometimes a difficult call. On the one hand, some employers want holiday parties to build morale and camaraderie, so they opt for employee-only affairs. Others choose to permit spouses and guests. In some cases, allowing guests may help prevent harassment claims if the theory holds true that employees are not likely to flirt or behave inappropriately if a spouse or significant other is present.

In addition, employers should invite customers and clients only after careful consideration. The last thing an employer wants is overindulgence or poor judgment at a social event to damage or even destroy a business relationship.

Bottom line
In sum, careful planning now and implementation of proactive measures can make this year’s holiday party more enjoyable, safe, and litigation-free.

Craig Borowski is a partner with Faegre Baker & Daniels in Indianapolis, Indiana, and a member of the Employers Counsel Network. He may be contacted at craig.borowski@FaegreBD.com

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