Play Ball: Liability-Free Company Sports Teams

Sponsoring an employee sports team might seem an innocuous way to boost employee morale and promote team building. But experts said it pays to assess and mitigate legal risks surrounding such events.

“There are some precautionary measures you can take so you don’t run the risk of being liable for either a workers' comp claim or the injury of someone else by an employee during company events,” said Lori Hall, SPHR, manager of HR Consulting Services at Employers Resource Association in Columbus, Ohio.

Workers’ compensation laws vary from state to state. But in general if an employee is injured playing on a company-sponsored team that is otherwise run by employees, the employee is not covered by workers’ comp because such benefits typically are paid for injuries suffered during the course of employment. There might be some exceptions, however, and there are steps that employers can take to avoid such a finding.

In Ohio and many other states, the state workers’ compensation agency provides forms that employers can require employees to sign that will provide “very strong protection against … claims” for such activities, said William A. Nolan, a partner and member of the labor and employment law department at Barnes & Thornburg in Columbus.

“The employer could possibly have liability as a property owner if it owned the facility where the activity was taking place, or in some other nonemployer capacity, but that scenario is unlikely,” Nolan added.

Hall said companies can get tripped up if they say that an event is voluntary but “do things to an employee to indicate that it’s really not,” such as noting in a performance evaluation that the employee didn’t participate. The assumption then becomes that “this is something I better do if I want to get ahead,” Hall said.

Nolan said that in addition to any state workers’ compensation-specific form, organizations should work with legal counsel to design a general release stating that the activity is voluntary, that the company will exercise no supervision of the event, that the employee assumes the risk of any injury and that the employee releases the company from any liability for injury sustained during the activity.

Two Sample Cases

Katherine E. Koop, an attorney with Tucker Arensberg’s labor and employment practice group in Pittsburgh, noted two cases that highlight courts’ differing views on employer liability:

In Anheuser-Busch Co. Inc., & A. v. Daniel R. Pelletier, 641 A.2d 1018 (N.H. 1994), the New Hampshire Supreme Court held that an employee who injured his back bowling in a company-sponsored league failed to prove that his injury arose from, or was created by, his employment because at the time he wasn’t on company property, “was not engaged in any activities related to brewing beer, was not required by his employer to participate and failed to show the employer received a benefit from his participation” in the league, Koop said.

In contrast, she said, Pennsylvania courts have long held that the determining factor for liability is whether an employee is furthering an employer's business when injured. In Tredyffrin-Easttown School District v. Breyer, 48 Pa. Commw. 81, 408 A.2d 1194, 1195 (Pa. Cmwlth. 1979), the court affirmed the grant of benefits to a claimant after he was injured at a team picnic because the picnic was found to be an annual tradition, a normal part of activities involved in the employer's program, and because the employer encouraged the claimant's participation. The court focused on the fact that “participation in the event was so much of a part of the employer’s culture that it was almost a job expectation, therefore, it was a part of the job for workers’ comp purposes,” Koop said.

About Alcohol

Koop recommends that employers not allow alcohol at company-sponsored sporting events. Purchasing alcohol can expose employers to liability if an employee leaves the event and injures himself or a third party.

Again, the question is whether the activity was being conducted “in the course and scope of employment” or if the employer otherwise controlled the activity. If it is not, the employer is unlikely to be liable, Nolan said. However, “if the employer is more closely involved in the activity, it could be liable for negligent supervision of its employees,” Nolan added.

Nolan stopped short of saying that companies should forbid alcohol. He said he recognizes that HR wants to manage employees’ behavior, but he added, “At the same time, you don’t want to manage the behavior too much, because then it’s your activity. When you start to have rules that you can’t have alcohol, you want to be careful. If you have too many work rules, then it is work, and the company has more risk of liability.”

Guidelines

Here are some other guidelines for company-sponsored employee sports teams:

• Don’t hold events on company property or during company time. And don’t allow employees to leave work early to attend games unless the employee chooses to do so “under the usual time-off policies,” Nolan said.
• Make sure that the employee handbook is updated and details company policy about social events and athletic activities.
• Remind employees that normal work rules and standards apply to these types of activities, Koop said.
• Remain “keenly aware” of other nonemployer-sponsored employee recreational activities such as a weekly pickup game of basketball among workers on your premises, Koop said. Even if the company isn’t sponsoring or paying for these activities, “they could expose the employer to liability,” she said.
• Have zero tolerance for sexual harassment. Although Nolan recommends not over-regulating sports teams, he takes exception if someone believes that they’re being sexually harassed. “In that case, the risks of not regulating the behavior are higher,” Nolan said.

Pamela Babcock is a freelance writer based in the New York City area.