How to Reduce Employer Liability at Holiday Parties

Employers can avoid liability for serving alcohol at work events by taking these 8 steps.
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Alcohol consumption at organization-sponsored events can create significant legal liability. However, organizations that host company holiday parties weigh the pros and cons, and many ultimately decide that they can trust their employees to act as professionals.

Thanks to the COVID-19 pandemic, 2021 isn't a typical year. With fewer events being scheduled, it's likely that alcohol will not be a major employer concern for a little while.

Learn about how employers can reduce their liability when it comes to alcohol, harassment, and more.

Company Events in the Age of COVID-19

During COVID-19, employers have been discouraged from holding large-scale company events, so you can anticipate that many celebrations in 2021 are likely to be virtual, canceled, or never scheduled in the first place. As more Americans become vaccinated, and the weather improves, there may be instances of employers scheduling outdoor events, where employees can personally distance themselves.

Importance

The Centers for Disease Control and Prevention (CDC) has issued guidelines that strongly discourage gatherings. Keep in mind that alcohol use at any gathering could lower inhibitions and potentially put more people at risk.

Before and After COVID-19

In an extensive 2015 survey of employers, 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. Some of the methods used include the following:

  • Providing drink tickets or a drink maximum (71% of respondents)
  • Serving only certain types of alcoholic beverages, such as beer and wine (25%)
  • Having a cash bar (18%)
  • Other (11%)

Companies schedule and plan holiday parties with the best of intentions. Often, parties are designed to reward their employees, boost morale, and encourage team spirit.

But these gatherings—particularly when alcohol is served—can turn into an environment for unwanted sexual advances and potentially illegal employee conduct if the employer is not careful.

This is especially the case when the holiday party is held at an offsite location—which, according to the SHRM 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 might engage in behavior that they would likely not do while on the job.

What Do Employers Worry About Most?

Holiday parties often bring more than just intoxicated high jinks. Being too merry can sometimes mean crossing the line, ranging from offending a co-worker 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.

Tip

There are two actions that employers can take prior to the holiday party: reminding employees that respect and professionalism still apply at company-sponsored events, and establishing social media policies that prohibit employees from posting photos or videos without management permission.

There are also potentially serious legal issues when it comes to parties that get out of hand.

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 employees. 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.

Conduct is not illegal simply because it is inappropriate or makes a co-worker 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.

Warning

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 case that received substantial publicity, a California appellate court reversed the trial court’s grant of summary judgment for the employer. It found that an employee who had 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 liability. Key examples of actions that are recommended for employers to consider include:

  • Anti-harassment policies: Be sure to have written anti-harassment policies in place, clearly stated in employee handbooks—and publicize those policies prior to the holiday party.
  • Reminders of expected behavior: Send a memo reminding employees to act responsibly at the party, clearly expressing a lack of tolerance for any inappropriate behavior, including drunkenness.
  • Workplace dress code: Enforce the workplace dress code at the party to avoid any inappropriate or suggestive attire, and let the employees know your expectations in advance.
  • Voluntary attendance: Make attendance at the party voluntary, and do not suggest that attendance will benefit a person’s standing within the company.
  • Expectations around alcohol: If alcohol is served, set a tone of moderation in advance through interoffice memos, emails, meetings, or inserts into paychecks or other communications, and stress that excessive alcohol consumption will not be tolerated.
  • Decentralizing alcohol: 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.

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 arise.