Don’t let your holiday party become a legal liability

No one wants to be a spoil sport. Holiday parties are supposed to be festive and fun, but they can also be a breeding ground for liability under tort, workers’ compensation, sexual harassment, discrimination, and other laws. Planning ahead to minimize exposure can help ensure a lawsuit-free event.

Workers’ Compensation

A North Carolina case last year, Lennon v. N.C. Judicial Dept., illustrates the issues that are common when an employee is injured at an office event. Whether such injuries are covered under workers’ compensation laws will depend on many factors (which can vary by state), but the overriding question is whether the employee was acting in the course and scope of employment at the time of the incident.

In this case, the injured employee worked for the division of the county clerk’s office that was in charge of planning the annual office holiday party. During regular working hours, she designed invitations, arranged for catering, and helped plan the party. She also volunteered to serve as the “emcee” for the event. All employees were invited, but not required to attend, and the cost of the food and venue was paid for by a group of private attorneys who sponsored the party. Even if they did not attend, all employees were expected to contribute $13 to pay for a gift to the clerk of court and for cleaning up after the party.

On the evening of the party, she fell and suffered a fracture of the wrist and coccyx and a tear of her shoulder. She received short-term disability benefits and filed a workers’ comp claim for days missed from work, permanent partial disability, and medical expenses. When the insurance company denied the claim, it went through a series of appeals, which upheld the denial.

The appellate court used a six-question analysis to help determine if the injury arose out of the scope of employment:

  1. Did the employer in fact sponsor the event?
  2. To what extent was attendance really voluntary?
  3. Was there some degree of encouragement to attend, evidenced by such factors as:
    1. taking a record of attendance
    2. paying for the time spent
    3. requiring the employee to work if he did not attend or
    4. maintaining a known custom of attending?
  4. Did the employer finance the occasion to a substantial extent?
  5. Did the employees regard it as an employment benefit to which they were entitled?
  6. Did the employer benefit from the event, not merely in a vague way through better morale or good will, but through such tangible advantages as having an opportunity to make speeches and present awards?

While laws will vary by state, employers who take careful steps to disassociate the event from work and confirm that the venue and service providers are properly licensed will minimize their risk.
Tort

While drinking too much at a holiday party may derail a career, alcohol is at the root of many lawsuits and employers need to take steps to ensure that the revelry does not get out of hand. When excessive drinking occurs, employers can face claims of social host liability, negligence, and respondeat superior, which holds employers responsible for the acts of employees such as DUI cases.

A recent New York case, Gillern v. Mahoney, illustrates the exposure that excessive drinking can cause, even when the employer had no role in the celebration. A number of employees organized a holiday party and when a co-worker became intoxicated, they contacted his wife (also an employee and a nurse) to take him home. When she arrived, they assisted her in getting her inebriated husband into the car. When at home, she let him sleep it off in the car, but later, she found him dead on the car floorboard.

Even though the party was not sanctioned or paid for by the employer, was not held on its property, and all participating employees were off duty, the employer was sued for the worker’s death. Upon appeal, the appellate court found that the action of the co-employees was not the proximate cause of the decedent’s death and the employer and various co-employees could not be held responsible in tort.

It would be an easy solution not to serve alcohol, but that is not always realistic. Employers need to establish limits on the amount and type of alcohol that will be served. Definite “no’s” are an open bar and allowing employees to serve drinks. Limit the number of drinks with a drink ticket system or don’t provide free drinks at all, close the bar early, hold the event off site at establishments with a liquor license and properly trained bartenders, provide plenty of food, and arrange alternative transportation. Be sure management leads by example. Advise employees to be responsible with a statement on the party invitation and/or a written reminder on the responsibilities to drink only in moderation and to avoid driving after drinking.
Harassment

This year, where we seem more divided than ever and some are emboldened to mock or denigrate others, if it can go wrong, it will. In a social situation with alcohol, employees can lose their inhibitions and do offensive things that they wouldn’t normally do in a work environment. Yet, an employee’s diminished capacity is not a defense to claims of harassment or assault and employers could be held responsible because they created the environment for that conduct to take place. Other issues that can lead to lawsuits are a religiously themed party and religious symbolism, hanging mistletoe, inappropriate postings on social media that could lead to claims of a hostile work environment, harassment or discrimination.

While hosting a party off-site can better protect your company, employees can also assume office standards of conduct do not apply. Employers should remind workers that behavior at the party should comport with the same behavior that is acceptable in the workplace and that the same reporting procedures apply should any incidents occur. Make the dress code known and avoid holiday attire or costumes. Remind supervisors and managers to set a professional example, by staying clear of talking about promotions, performance, and other business matters related to individual employees, and not selectively offering personal compliments.
Gift exchanges

Similar to office parties, Secret Santa and Yankee Swaps, and other forms of gift exchange are popular during the holiday season. It’s important to make this voluntary and set parameters for appropriateness, inclusivity, and price.
Nine actions to minimize risk

While each state has its own nuances in the law, employers can best protect themselves with these actions:

  • Hold the party off-site and not during office hours
  • Ensure that attendance is truly voluntary; there is no coercion to attend and no high expectation of attendance
  • Be cautious about inviting vendors, clients or others with whom you have a business relationship
  • Refrain from engaging in business activities, such as speeches and distribution of awards
  • Avoid asking employees to perform specific functions at the party or recognize that in so doing, they could be considered in the scope of employment
  • Limit or do not serve alcohol
  • Remind employees that normal workplace standards of conduct are to be respected, including the use of social media, and immediately stop inappropriate conduct
  • Confirm that the venue is properly licensed
  • Understand your exposure and corresponding insurance coverage

For Cutting-Edge Strategies on Managing Risks and Slashing Insurance Costs visit www.StopBeingFrustrated.com

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