happy holidays spelled on sugar cookies

Keep Holiday Parties in Check to Avoid Liability

As the holiday season approaches, many employers plan company-sponsored events, such as holiday parties or customer appreciation events. Employers, after taking the appropriate steps to minimize liability, can benefit from hosting these holiday social events.

Generally, where a company-sponsored event is found to be within the course and scope of employment, the employer may face liability in the areas of equal employment opportunity, workers' compensation, and liability to outside parties.

Equal Employment Opportunity

Sexual harassment is probably the greatest EEO risk at company-sponsored events. Some good preventive steps are to control the flow of alcohol and avoid games or activities that involve touching or would encourage inappropriate behavior. White elephant gift exchanges can be a lot of fun, but be sure that the gifts exchanged are in good taste.

From a racial, national origin, or religion standpoint, employers should beware of holding functions at private clubs with restricted membership. Also, the facility should be accessible to individuals with disabilities. Some employers have replaced the evening parties for group outings to amusement parks, pot-luck luncheons, or volunteer activities with local charities.

Rewarding employees with a standard gift at the end of the year may backfire if broader perspectives are not taken into consideration. For example, diabetics, recovering alcoholics, or those adhering to religious dietary restrictions may not appreciate gifts of food or liquor. Generic gift certificates or cash bonuses are alternative methods of recognizing employee efforts.

Finally, the holiday party should be a holiday party, not a "Christmas party" or "Hanukkah party." The manger scene, dreidels, and other religious symbols are not appropriate decorations. While employees may grumble about being "politically correct," employers, aware of the diversity of employees and clients, should respect and make reasonable accommodations of all religious beliefs.

Workers' Compensation

Several states have statutes that specifically address employee injuries from recreational or social activities. Some states limit the employee's recovery to those activities for which the employee is paid to participate. Other states allow employees to recover compensation if the employee's participation was specifically directed by the employer. Additionally, employees may recover if the injury occurred on the employer's premises, the premises contained a known unsafe condition, the employer knew employees were participating in the activity, and the employer failed to stop the activity or fix the unsafe condition. Much of the analysis turns on the laws of the applicable jurisdiction and cannot be addressed without specific knowledge of the facts involved.

Personal injury

Depending on the particular circumstances and state law, employers may face liability for negligent acts of employees at a social event. For example, an employee hosts an annual holiday party to show its appreciation for its clients and, after drinking too much at the party, an employee causes an automobile accident. In some states, the employer may be liable for injuries caused by its employee.

Employers also may face liability for employees attending outside events. For example, an employer who requires employees to attend a client's party may be liable if the employee commits an actionable intentional or negligent act while at the event. Courts have found that the employer is liable because it stands to benefit from the customer's goodwill generated by the employees' attendance.

Employers should continue to host recreational activities after taking the appropriate steps to minimize liability. Here are a few steps to minimize liability for these events:

  • If attendance at a company-sponsored event is not required, clearly state so in all announcements that time spent at the event will be unpaid and not considered as "hours worked."
  • Do not conduct any work-related activities, such as training or award presentations, at the event. Be cautious about inviting vendors, clients, or others with whom you have a business relationship. Plan the activity or event at an off-site location and during the weekends when possible. Doing so may support an argument that the events were strictly social and not work-related.
  • Invite family members. This supports an argument that the event is not business related, and family members are a "natural deterrent" against sexual harassment.
  • Beware of alcohol. Hold social events at locations that do not serve alcohol or, if you have alcohol, avoid open bars. Arrange for a limit by hiring an outside company to serve the drinks and ensure its bartenders have been trained to avoid over-serving. You can also limit the selections to beer and wine and give each attendee a limited number of drink tickets. "Last call" should be held at least two hours before the end of the event, to help prevent DWIs. If none of these steps is possible, consider paying for taxi rides home so that employees will not drive under the influence.
  • Don't create an atmosphere conducive to sexual harassment by providing risqué or potentially offensive forms of entertainment. Comedy clubs are fun but are not the most appropriate environment for a work-related function. Avoid event locations that are naturally provocative, such as casinos, bars, sex-themed restaurants, and pools or beaches.
  • Be direct in telling employees, before the event, of your expectation that company policies -- including the code of conduct, the policy against harassment, and the discipline policy -- apply to these activities.

Megan Walawender is an attorney with Constangy Brooks and Smith LLP in its Kansas City, Mo. location. Her practice is devoted to representing employers in workplace matters.

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