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[Author: Bob Evnen, Woods & Aitken LLP, 2013 | Keywords: Human Resources, Liability]

Thanksgiving marks the start of not only of the holiday shopping season, but the company party season as well. These company events are intended to be festive, a chance to reward employees and celebrate the season. Good intentions and good cheer should be combined with thoughtfulness and a degree of prudence in order to minimize the risk of liability that can come from these events.

Consumption of alcohol is the root of many holiday party problems. Simply not serving alcohol is one solution to many holiday party issues that can be considered. For many employers and employees, however, a bit of holiday cheer is part of the celebration. Where alcohol is served, three forms of potential for liability are in the picture: social host liability, worker’s compensation liability, and harassment liability.

Social host liability arises when your intoxicated guest causes injury. The risk is greatest for drunken driving accidents that occur when an impaired guest drives away from the party and gets into an accident. States vary as to whether they impose social host liability. Neither Iowa nor Nebraska has a social host law making a host responsible for injuries caused by an impaired adult. Both states, however, will impose liability for harm caused by intoxicated minors (those under age 21) who consumed alcohol at property controlled by the social host. In those states that hold social hosts liable in an employer-employee situation, whether by statute or by court decision, there typically needs to be a connection between the employment and the impairment. Such connections may include holding the party on company property, having the party during work hours or while the employee was on the clock, or serving alcohol provided by the employer.

Worker compensation liability for injuries that occur during a company party will depend on whether the injury “arises out of and in the course of employment.” Nebraska and Iowa have adopted similar tests to determine when injuries at company social gatherings are compensable under workers compensation laws: (1) the activity occurred on company property during a lunch or recreation period as a regular incident of employment; (2) the employee was expressly or impliedly required to attend a party or the activity was part of the employee’s service to the employer; or (3) the employer derived substantial benefit from the activity beyond the intangible value of improvement in employee health or morale.

Finally, employers must stay alert to potential employee harassment. Employers are well advised to establish, communicate and actively enforce harassment policies. As we all know, though, the introduction of alcohol lowers inhibitions, which increases the possibility of harassment.

What can you do to limit your liability?

  1. Now is a good time to remind employees about company policies (particularly with regard to harassment).
  2. Designate “Party Managers” who will circulate during the party to better assure that alcohol consumption is controlled and that unwanted behavior is minimized.
  3. Make the party voluntary and expressly communicate that to employees.
  4. Hold the party off-premises and outside of normal work hours.
  5. Consider issuing tickets for free drinks and limit the number given each guest.
  6. Serve food and non-alcoholic beverages. Serve food rich in starch and protein rather than simply salty, sweet, or greasy food.
  7. Limit the time the bar is open, and strictly enforce the cut-off time.
  8. Require identification to determine age.
  9. Consider hiring professional bartenders who are trained in serving guests, checking identification, and identifying and cutting-off the overindulged.
  10. Do not serve hard alcohol. Limit drinks to beer and wine.
  11. Offer an alternative to driving—free rides, designated drivers, or discounted rooms if the event is at a hotel.
  12. Hold the event on a weeknight with a workday the next day.

Bob Evnen is a partner with Woods & Aitken LLP in Lincoln, where his practice focuses on advising and representing Nebraska and Iowa employers in labor and employment law issues.