The holidays are right around the corner and this often translates into lots of company-sponsored events, parties and commitments. While these events bring joy and merriment to employees, they can also bring legal troubles for employers related to alcohol, harassment, violence and discrimination. Employers must know that they are legally responsible for whatever happens at a company party and sometimes for events which occur after.
Employers who host events where alcohol is served must be very careful and absolutely aware of their legal obligations whether the event takes place on or off company premises, or at the home of the business owner/manager. Due to the nature of the employer-employee relationship, courts have clearly stated that the standard of care on an employer is higher than that on a tavern owner or a social host.
Although there are no recent developments, because of the nature of such legal obligations it is always good to review the principles that need to be applied under this topic.
Every employer planning a holiday party needs to think about the safety of the people attending, especially if some of those people are going to be drinking alcohol. Recent court cases have broadened the scope of employer responsibility for monitoring employee behaviour at company-sponsored events where alcohol is served. As a result, it’s crucial that employers understand the legal responsibilities and risks that such events involve, including how to reduce the potential for legal liability.
Where an employee drinks a large amount of alcohol, drives and subsequently gets into a car accident, causing significant injuries to the employee or others, employers may be found vicariously liable for the actions of the employee. Courts show no mercy when making awards for damages in these types of cases. Despite the fact that plaintiffs (possibly including a drunken employee who causes an accident) are found to be partly responsible for their own fate, employers have been ordered to pay plaintiffs large sums of money for their portion of responsibility.
What does vicarious liability mean?
Vicarious liability describes organizations’ ultimate responsible for an event or property. By law, organizations are held vicariously liable for the actions and negligence of the employees and volunteers who attend. Organizations could be vicariously liable for negligent, intentional or unintentional actions of people operating on their behalf. In other words, employees’ negligent actions may be considered the actions of the organization if the actions are performed while the employee is in the course of employment. This vicarious liability can even extend to intentional acts of civil wrongs (torts) done by employees or agents of an organization that cause harm to a third party. Such intentional torts include actions such as harassment, assault and battery.
Note that the law is not yet definitive in this area. This article is intended to help guide you on your legal obligations.
What employers should do given this principle
Recent legal decisions have broadened the scope of an employer’s responsibility for monitoring employee behaviour, where alcohol is consumed, both within and outside of the workplace.
Employers who choose to make alcohol available to employees must take steps to avoid foreseeable risk of injury that arises when intoxicated employees choose to drink and drive. If employers fail to do so, courts will hold them to the highest standard of care.
Employers who host company-sponsored events where alcohol is served can limit the legal risks and reduce potential liabilities by taking certain precautions. The conclusions that can be drawn from recent cases are:
- Any claim by an employee against an employer for loss arising from the provision of alcohol will be based entirely on the law of master and servant and the duty of care that an employer owes to its employees
- An employer is responsible for ensuring that an employee who drinks does not drive home, and for providing an alternative mode of transportation
- At a sponsored event, an employer must be in a position to monitor employees’ consumption of alcohol and to know, from the amount of alcohol consumed, whether he or she is in a position to operate a motor vehicle
- If an employer is aware of alcohol consumed on its premises, then its duty is to ensure that the employee makes it safely home
Below are a few other things employers should consider to lower their liability and lessen the chance of a lawsuit.
Serving alcoholic beverages
The first issue for any employer planning a company-sponsored event such as a holiday party is how alcohol will be handled. When alcohol flows, legal risks arise. Without having to cut alcohol altogether from your company-sponsored events, there are some preventative measures that could reduce the likelihood of triggering liability.
- Use drink tickets or a cash bar to control consumption
- Stop serving alcohol an hour or more before the party ends
- Have plenty of non-alcoholic beverages on hand
- Have professional bartenders who will ID everyone who is not clearly over 18 or 19 or 21 (depending on the jurisdiction), and refuse service to inebriated employees
- Serve plenty of food: starchy or high-protein foods help slow the absorption of alcohol into the bloodstream and are better than salty, greasy foods which make people thirsty and tend to make them drink more
- Discourage excessive drinking: have designated, responsible and sober employees monitor the event and alcohol consumption and report any possible issues to the employer
- Give someone the authority to “cut off” employees or managers who are intoxicated
- Arrange for designated drivers
Remember, employers who serve visibly intoxicated employees and guests may be held liable for damages caused by those inebriated employees and guests after they leave the party. To lower your liability in the event an employee leaves the party drunk and causes an accident, have some form of transportation available for employees who have had too much to drink; for example, you could offer pre-paid taxi cab vouchers or call a family member to come and pick them up.
Violations of workplace policies and discrimination at work-related events
Since a holiday party is a company-sponsored event, all legal requirements and all policies in the employer policy manual and handbook remain in force. In particular, the rules regarding harassment, violence, conduct and behaviour as well as anti-discrimination still apply. You should republish and recirculate the company’s policies against harassment, violence and discrimination, as well as the code of conduct, prior to the event taking place.
The consumption of alcohol tends to both lower inhibitions and alter perceptions, including whether certain behaviour is “welcome”. Limiting alcohol consumption will help, but employers should take prompt action regarding any complaints of inappropriate behaviour.
In addition, to avoid religious discrimination claims, use the term holiday party instead of focusing on one December holiday and thus singling out one religion (i.e., “Christmas” party). This may help everyone feel welcome, whether they celebrate Christmas, Hanukkah, or some other holiday. Also, do not make attendance or participation mandatory, or suggest that attendance will help the employees’ status with the company, as some religions forbid such activity.
Final words on the matter
Even with the utmost care and planning, accidents and unforseen events happen. To protect against them, make sure your company purchases extra liability insurance to cover such events. Check for alcohol-related exclusions. Or, have the party at a restaurant, bar, event hall or other location that has its own liability insurance. Don’t presume they do; make sure they do.
Overall, remember that the company’s holiday party should be a fun time for everyone. A few precautions can still allow employees to enjoy themselves while at the same time lowering the employer’s potential exposure to lawsuits.
Most important, management should set the tone and provide a good example by avoiding too much consumption and unwanted behaviour.
First Reference Human Resources and Compliance Managing Editor