December 11, 2009

9 Tips to Limit Holiday Office Party Legal Exposure

‘Tis the season for holiday parties and the spreading of good cheer in the workplace. Unfortunately, though, too much cheer can cause liability. If your plans include serving alcohol at holiday parties or even sponsoring department “happy hours” at a local pub, your organization could be at risk for legal liability if a drunken employee harms himself or others.

Employers can be sued for their intoxicated employees’ misdeeds under a number of different legal claims and theories, ranging from workers’ compensation to sexual harassment to negligence. Fortunately, despite overall increases in litigation, you generally are still shielded from liability in most states.

Even with this shield, and regardless of actual negligence, the employer remains a tempting legal target and is considered the “deep pockets” when damages are sought. And, no one wants to be in the position of defending an unpleasant case involving injuries or death. A better approach is to prevent these accidents and problems altogether by taking some common sense steps to limit alcohol consumption and its effects.

Below, you get a look at the legal issues and some cases addressing employer liability for alcohol-related incidents. Plus, you also will find nine tips to help prevent alcohol-related problems, or at least limit your liability exposure if they do occur.

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Legal Issues to Consider When Throwing an Office Holiday Party

Employer Liability According to “Respondeat Superior”

One of the big concerns for employers, when alcohol is involved, is the potential for liability for injuries to nonemployees. Most often, third parties injured by an organization’s intoxicated employee will claim employer liability on the theory of “respondeat superior.” Under this legal doctrine, the employer may be liable for its employee’s acts if they were committed within the scope or course of employment.

For example, in Carroll Air Systems, Inc. v. Greenbaum, 629 So.2d 914 (Fl. App. 1993), the employer was liable for third party injuries caused by an intoxicated employee. In that case, the employer paid the mileage and automobile expenses for the employee to drive to and from the meeting where alcohol was served and at which the employee became intoxicated.

In contrast, in Wadley v. Aspillaga, 209 F. Supp. 2d 119 (D.D.C. 2002), aff’d in unpublished decision, 2003 U.S. App. LEXIS 27281 (D.C. Cir. 2003), the employer was not liable for the death of a child killed by its employee who was driving while intoxicated after leaving the employer’s holiday party. The court determined that the party was a purely social event and did not advance the employer’s business interests.

Workers’ Compensation Laws

While respondeat superior legal theory deals with liability to third parties, workers’ compensation laws deal with employer liability to its own employees or their survivors. In general, these laws cover all work-related injuries regardless of fault. However, they do typically exclude injuries that are incurred at employer recreational events where attendance is not required or that are the result of the employee’s intoxication on the job.

Various states have different rules that apply to injuries resulting from an employee’s intoxication on the job. Some states, such as New York and Indiana, exclude these injuries completely. Others, such as Wisconsin, reduce the compensation awarded the injured employee.

Wrongful Death and Survivorship Statutes

Employers may also be sued for alcohol-related incidents under state wrongful death or survival acts. Under these laws, the personal representative of a deceased person may file suit, on behalf of the surviving spouse or next of kin, against any party whose actions caused the death. The purpose of these laws is to compensate survivors by providing the financial benefits that would have been received had the person lived. However, survivors have had little success suing employers for wrongful death based on the intoxication of employees when they could not show that the employee was within the scope of his employment or under his employer’s control.

Employer Negligence

Persons injured by intoxicated employees sometimes claim employer negligence. These claims often arise in the context of the office party where an employee becomes intoxicated, leaves the party, and injures another person on the way home. The theory behind this claim is that the employer owed a duty to the injured party to exercise reasonable care and breached or violated that duty thereby causing harm to the injured third party.

Courts have been hesitant to find that employers have a duty of care to third parties except in situations where, for instance, the employer continues to serve drinks to an obviously intoxicated employee. In these situations, the deciding factor may be the employer’s authority to deny alcohol to the inebriated employee.

In another interesting development in negligence theories, a few courts have found that an employer may be held liable to third parties if it has taken action, but which proves to be inadequate, to exercise control over the employee after the employee becomes intoxicated. In other words, if you are going to be a Good Samaritan, make sure you get the job done.

Danger for an Employer: Harassment Claims

Besides personal injury claims, employers are also vulnerable to harassment claims when inebriated employees make inappropriate advances toward coworkers. In fact, the Seventh Circuit Court of Appeals, in Place v. Abbott Laboratories, 215 F.3d 803 (7th Cir. 2001), specifically noted, “office Christmas parties also seem to be fertile ground for unwanted sexual overtures that lead to Title VII complaints.”

The court went on to cite approximately 20 cases where employees complained of harassment occurring at employer-sponsored parties. These cases underscore the potential problems associated with alcohol consumption at any employer-sponsored event.

Avoiding Office Party Legal Issues – To Serve or Not to Serve

So what’s an employer to do? Your most conservative policy option is to ban alcohol consumption in all business settings, including holiday parties. However, many may view this prohibition as unduly restrictive or unrealistic, especially for essentially social or team-building functions.

Therefore, a more practical solution may be to have a clear policy statement requiring employees to exercise moderation and good judgment when drinking at a business function. Obviously, for such a policy to be effective, top management must support it and set a good example.

In addition, if your organization decides to serve alcohol at its business functions, your best bet is to manage the situation carefully, enforce certain limits, and require employee moderation and good judgment. The following nine steps can help you do that.

Nine Steps for a Hosting Safe Holiday Party

1. Have a clear policy prohibiting the use of alcohol (and illegal drugs) while working. The policy statement should include any exceptions you want for business social functions and entertaining.

2. Emphasize that attendance is voluntary and that the function is a social event so there is less chance that the function will be considered directly related to work.

3. Make it clear that employees who become intoxicated at employer-sponsored events will be subject to discipline.

4. Remind employees that work rules regarding appropriate behavior and harassment apply to employer-sponsored events.

5. Limit the availability and consumption of alcohol by stipulating that it may be served only for a set period of time.

6. Do not allow supervisors to purchase alcoholic drinks for employees.

7. Serve substantial food that can offset the effects of alcohol.

8. When possible, hold events at restaurants or other sites not operated or staffed by the employer.

9. Have a designated monitor to make sure that intoxicated or impaired employees do not drive themselves home.

Alcohol, business entertaining, and employee functions are a volatile mix. You need to understand your organization’s needs and responsibilities before setting policy. If you don’t want to prohibit alcohol consumption totally, then take the above steps to control consumption, require accountability, and limit your exposure.

Regards,

Robin Thomas, J.D.
Personnel Policy Service, Inc.

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