4 Holiday-Party Considerations for Limiting Employer Liability

The holiday season is here, and many employers will host their annual year-end celebrations in the weeks to come. These events are generally meant to reward employees and foster camaraderie—but employers could be on the hook for holiday-party mishaps.

Potential problems at social gatherings include bullying, sexual harassment and other misconduct, as well as accidents and injuries, noted Keith Markel, an attorney with Morrison Cohen in New York City.

"It's important to make expectations clear from the start," said Nathan Baker, an attorney with Barnes & Thornburg in Indianapolis. "Think about the message, and make sure it's positive."

For example, he said, employers might want to say, "Let's have a good time. We don't anticipate any issues, but this is a work event and we obviously expect everyone to act professionally."

It might be worth mentioning that employees are welcome to wear festive attire, but they should still dress appropriately for an event with their peers, said Charles E. "Chad" Reis IV, an attorney with Littler in St. Louis.

The leadership team should set the example for the rest of the staff, Baker noted. Furthermore, leaders should encourage workers to report any incidents as soon as they happen so that the employer can play an active role in any resolution, he said.

Businesses can't eliminate all the potential liability that stems from company-sponsored events, but they can create an environment that limits their legal exposure. Here are four questions employers should consider when gauging their potential holiday-party liability.

1. Will Alcohol Be Served?

The days of "free-for-all open bars" are long gone, but many employers still opt to serve alcohol at company gatherings, Baker noted. Those that do should create an environment that doesn't lend itself to over-drinking, he said.

He recommended that employers hire a catering service that has the appropriate insurance and licensing and that can provide professional servers and bartenders who are trained to handle alcohol-related issues. This has the added benefit of making the party look a little fancier, he noted.

Employers may also want to consider serving only beer and wine and keeping liquor with high alcohol content off the menu.

They should consider limiting the amount of alcohol that is served, Reis said. For example, each employee could be given two drink tickets to use at the party.

But Baker cautioned that employees who want more drink tickets can usually find them, so while issuing drink tickets may be a good idea, it might not stop workers from overindulging.

"Consider limiting the hours that alcoholic beverages are served," Markel said. For example, an employer could stop alcohol service an hour before the holiday party is scheduled to end. This is a practice used at most sporting events and has proved to be an excellent deterrent to employees leaving the holiday party with impaired judgment, he added.

Employers could also serve dessert and coffee after they stop serving alcohol and schedule any speeches or presentations during that time, he said.

Additionally, employers may want to offer a shuttle service to public transportation or pay for taxis and ride-hailing services.

2. Where and When Will the Event Be Held?

The place, day of the week and time of day for the holiday party can all affect employee behavior. A party at the workplace may remind employees to act professionally, but it might not feel like a reward. A party at a downtown venue may feel more festive but may be more likely to get out of control.

Employers that are concerned about the effects of drinking may want to host a luncheon where no alcohol is served, Reis said. Alternatively, a late afternoon party with defined hours, perhaps from 5 p.m. to 7 p.m., might limit rowdy behavior.

If the party is held on a Friday or Saturday evening, employees might get a bit wilder than if it's held on a weekday evening, he added.

3. Is Everyone Included?

The party should be a celebration of the people who work for the company and not about a particular holiday, Baker said.

"Make sure all employees are invited, and encourage workers of all racial, religious and ethnic backgrounds to attend," Reis said. Careful consideration should be given to the date of the event because many religions celebrate holidays in December, he added.

Employers should consider putting together a planning committee that includes employees with diverse backgrounds. Attendees are more likely to be diverse if the planning committee is diverse, Reis said.

[SHRM members-only toolkit: Developing and Sustaining Employee Engagement]

It is also important to make attendance voluntary, he added, because some workers may not want to attend an event that is associated with a particular religion or practice or where alcohol is served. Furthermore, mandatory attendance could lead to wage and hour issues.

4. Is the Risk Worth the Reward?

It's probably too late to change the party plans for this year, but employers may want to follow up with employees after the celebration to find out what they want to do next year.

Would employees still attend if the party was held on a weeknight or at lunchtime? Are they tired of the big extravaganza, or do they look forward to it every year?

"Involve your folks," Baker said. "Maybe your employees would rather get a $100 gift card and have a pizza party. Or maybe they'd rather donate the money to a food bank and spend time volunteering." Employee engagement is the key, and there's no single solution, he said. What works for one organization may not work for another.

"Ask yourself what the goal is," Baker said. If the point is to host a morale-boosting event for the team, then the employer needs to know what the team wants. "Maybe it changes every year," he noted.

Instead of starting with the liability question, employers should first find out what type of celebration makes the most sense for the team, Baker said. "And then we'll find ways to limit the liability around that."