Employer-Sponsored Holiday Parties – Tips for Ensuring a Happy Holiday Season

It is estimated that over two-thirds of employers will host some form of holiday party for their employees this year, with many of these parties serving some extra holiday cheer in the form of beer, wine, and other alcoholic beverages. (BLG included!) While holiday parties can be a great way to build morale and/or demonstrate appreciation for employees’ hard work, employers need to ensure that this holiday fun does not turn into a New Year’s liability. With the holiday season upon us, now is the time to assess your company’s upcoming holiday party plan.

Notably, there is a surprising volume of litigation arising out of employer-sponsored holiday parties, the most common of which include employee claims of sexual harassment, respondeat superior/vicarious liability, wage and hour, and for worker’s compensation benefits. Not surprisingly, alcohol is often the culprit behind many of these claims.

For instance, in Harris v. Trojan Fireworks Co., 120 Cal.App.3d 157 (1981), an employer held a holiday party at its manufacturing plant during business hours where large quantities of alcohol were served. Following the party, one of employer’s employees drove home intoxicated and was involved in an auto accident killing one and injuring two others. Suit was brought against the employer based upon vicarious liability. The Court found that although there is generally no “social host” liability under California law, a sufficient connection existed between the employer’s Christmas party and the employee’s negligent act to justify holding the employer financially responsible for the injuries occasioned by the employee’s accident. In making its decision, the Court noted that the party was held at work, during work hours, the employee in question was paid to attend, and was encouraged to drink heavily.

Similarly, in Brennan v. Townsend & O’Leary Enterprises, Inc., 199 Cal.App.4th 1336 (2011), a female employee sued her employer alleging sexual harassment arising partly out of incidents at two separate employer-sponsored Christmas parties. First, at an employer-sponsored Christmas party in 2000 or 2001, a supervisor dressed up as Santa Claus and asked three female employees to sit on his lap while he asked personal questions about their love lives. Then again, at an employer-sponsored Christmas party in 2002 or 2003, the employer’s chief executive officer wore a red and white Santa hat with derogatory language written across the brow. The employee later sued alleging sexual harassment based on gender. The jury returned a quarter-million dollar verdict in favor of the employee on her sexual harassment claims. While the verdict was later overturned based upon the Court’s finding that the evidence submitted was insufficient to establish that the employee was subjected to “severe or pervasive” harassment, the employer undoubtedly spent tens, if not hundreds, of thousands of dollars defending this lawsuit.

While there is no way to completely insulate your company from liability arising out of employer-sponsored holiday parties, other than a decision not to hold a holiday party all together, there are certain steps that a company can take to limit such liability. Of note, many of these tips are helpful to keep in mind for other employer-sponsored activities such as company-affiliated softball leagues or charity events.

  1. Consider not serving alcohol, limiting the amount of alcohol served, or having a pre-defined time wherein alcohol will stop being served.
  2. Make clear that employee attendance at such parties is strictly voluntary and in no way a requirement of employment.
  3. Refrain from engaging in any business during the event, such as speeches about business matters or distribution of bonuses or awards.
  4. Avoid asking employees to perform any special function at the party.
  5. Consider allowing non-employee guests to attend. Although this may increase costs, the addition of guests may lessen the likelihood that a claim is made that the event was attended “on the clock” or in the “course of employment.”
  6. Hold the event off company premises, and if alcohol is going to be served, preferably at an establishment with a valid liquor license and professional bartenders who know how to respond to guests consuming alcohol in excess.
  7. If alcohol is going to be served, ensure that a wide variety of non-alcoholic drinks are available as an alternative.
  8. Likewise, if alcohol is going to be served, arrange for alternative transportation for employees leaving the party.
  9. Consider amending employer harassment policies to cover employer-sponsored events.
  10. Ensure that, where applicable, California mandated supervisor sexual harassment training is up to date.

Employers intent on holding employer-sponsored holiday parties should focus now on the precautions they can take to minimize potential liability arising out of such holiday parties. By following these simple tips, employers will be less likely to ring in the New Year with an unwanted lawsuit.

This article was updated and reprinted from the BLG archives.

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