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Liability depends upon several factors, but potential legal issues can be avoided by understanding some basic risks.
Workers' compensation. Although laws vary from state to state, in general, workers' compensation benefits are paid for injuries suffered during the performance of work. Therefore, if an employee is injured while voluntarily playing on a company-sponsored team that is otherwise run by employees, workers' compensation would not apply. Tips to reduce liability include not holding events on company property or during employee work hours; ensuring participation is strictly voluntary; and not allowing employees to leave work early to attend games, unless the employee chooses to do so under the usual time off policies.
General liability. An employer may be liable as a property owner if it owns the facility where the activity takes place. Employers should review their general liability and other property insurance policies for coverage of accidents sustained at sponsored events. To reduce liability, employers should ensure the employee handbook is updated with details about company policy regarding social events and athletic activities, and require employees to notify the employer of any employee recreational or social activities taking place on the property. Even if the organization isn't sponsoring or paying for the activities, the employer could be exposed to general liability risks.
Employee release of liability. Employers should work with legal counsel to design a general release of liability for employees participating in the event. Such a release may include statements that the activity is voluntary, not work-related, that the company will exercise no supervision of the event, and that employees assume the risk of injury.
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