How to Reduce the Employer's Liability at Holiday Parties

8 Actions Employers Can Take to Reduce Their Potential Liability

Employers can avoid liability for serving alcohol at work events by taking these 8 steps.
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The increased recognition that alcohol consumption at organization-sponsored events creates significant legal liability has had an impact on that traditional institution, the company holiday party—but this impact is not necessarily pervasive or severe. Organizations are carefully weighing the pros and cons and trusting employees to act as professionals has so far won the day. However, the years 2020 and 2021 are not typical years. Few events will be scheduled thus alcohol will not be a particular employer concern.

Company Events in the Age of Coronavirus

As state lockdowns continue and employers are prohibited from holding large scale company events, you can anticipate that any celebrations from Thanksgiving through the first few months of 2021 will be virtual, canceled, or never scheduled in the first place. In some areas that are warm during the fall and winter, you may have instances of employers scheduling outdoor events at which employees can personally distance themselves.

With fall and winter holiday celebrations in mind, the Center for Disease Control has issued guidelines that certainly apply to the workplace as well as individuals. Gatherings are strongly discouraged. Please note that the CDC discourages alcohol use at any gathering because it lowers inhibitions and may make people more at risk.

If the World Returns to Semi-Normal Following COVID-19 Considerations

In an extensive 2017 survey of employers (the most recent results available that deal with a pre-coronavirus year), the Society for Human Resource Management (SHRM) found that a majority of organizations (59%) planned to serve alcohol at their holiday or end-of-year parties. And only half of these employers (47%) said that they would seek to regulate alcohol consumption through methods such as:

  • providing drink tickets or a drink maximum (71% of respondents were in this category),
  • serving only certain types of alcohol (for example, making wine and beer, but not spirits available at the party) (25%),
  • having a cash bar (18%), or
  • other (11%).

Moreover, the SHRM 2015 survey found that year-round, a third of organizations (33%) have either a formal or informal policy that allows employees to drink alcohol at work-related events. (Each employee needs to determine if drinking alcohol at company events is for them.)

Companies schedule and plan holiday parties with the best of intentions, to reward their employees, boost morale, and encourage team spirit. But these gatherings, especially when alcohol is served, can turn into an environment for unwanted sexual advances and potentially illegal employee conduct if the employer is not careful.

That is especially the case when the holiday party is held at an offsite location (which, according to the SHRM 2015 survey, is the case in nearly 67% of such functions). In a social setting outside of the workplace, an employee whose inhibitions are lowered by alcohol consumption can engage in behavior that he or she would never consider doing on the job.

Employers' Worries Extend From Harassment to Employee Fatalities

Holiday parties often bring more than just intoxicated high jinks. Being merry can sometimes mean crossing the line, ranging from offending a coworker to violating the law. Moreover, in today’s real-time social media environment, drunken shenanigans at a holiday party can quickly be posted online for the whole world to see.

The first two actions an employer needs to take prior to the holiday party include reminding employees that respect and professionalism apply not only during work time but also at company-sponsored events such as office parties. And secondly, employers need to establish social media policies that prohibit employees from posting photographs or videos without management permission in social media.

These are two good initial steps, but far more needs to be done to deal with the more serious legal issues.

Employees are protected from sexual harassment and discrimination by Title VII of the Civil Rights Act of 1964, which covers employers having 15 or more employees (including regular part-time ones). Title VII provides two requirements for conduct to trigger potential liability for unlawful harassment:

  • The conduct must be unwelcome; and
  • The conduct must be sufficiently severe or pervasive.

It need not be both. Conduct is not illegal simply because it is inappropriate or makes a coworker feel uncomfortable. However, even a single, extremely serious incident of harassment may be sufficient to constitute a Title VII violation, especially if the harassment is physical.

So, if an office party incident follows previous incidents of misconduct, it could constitute the evidence necessary to reach the “severe” or “pervasive” threshold, ​which lays the foundation for a Title VII claim.

A second major legal liability is created by drunk driving following an employer-sponsored holiday party. In a 2013 court decision that received substantial publicity, a California appellate court reversed the trial court’s grant of summary judgment for the employer. They found that an employee who consumed alcohol at a company-sponsored event and, after leaving, struck another car and killed the driver created liability for the employer.

“It is irrelevant that foreseeable effects of the employee's negligent conduct (here, the car accident) occurred at a time the employee was no longer acting within the scope of his or her employment,” the court ruled.

Proactive Steps to Consider at the Holiday Party

Given such legal risks, prudent employers should take these six additional proactive steps to lessen their litigation liability. Key examples of actions that are recommended for employers to consider include:

  • Have in place comprehensive, written anti-harassment policies, clearly stated in employee handbooks—and publicize that policy prior to the holiday party.
  • Send a memo reminding employees to act responsibly at the party, clearly expressing a lack of tolerance for any inappropriate behavior including drunkenness.
  • Enforce the workplace dress code at the party to avoid any inappropriate or suggestive attire and let the employees know your expectations in advance.
  • Make attendance at the party voluntary, and do not suggest that attendance will benefit a person’s standing within the company.
  • If alcohol is served, set a tone of moderation in advance through interoffice memos, emails, meetings, inserts into paychecks or other communications, and stress that excessive alcohol consumption will not be tolerated.
  • Limit the number of drinks or the length of time during which alcohol will be served, and provide substantial non-alcoholic alternatives. Serve plenty of food and ensure that alcohol consumption is not the focus of the event.

The Bottom Line

Such steps are not a guarantee against holiday party problems, particularly if the decision is made to serve alcohol. But they can be an employer’s foundation for an effective defense against liability if problems should come to pass. Consider though that ten reasons exist about why employees often loath office holiday parties and take this into consideration as you plan your annual holiday bash.