Now that the holiday season is here, businesses typically throw a party for their staff to show their appreciation. You might invite customers to join in the festivities, too. However, holiday celebrations include risks and if you’re hosting a party you need to understand them.
Here are some of risks surrounding holiday parties and what you can do to protect your business.
Many businesses realize the importance of reducing, risk, particularly with all the recent sexual harassment coverage in the media. According to a 2017 Holiday Party Survey Report, fewer companies intend to serve alcohol this year, and some will limit their guest list or hold their party during the workday or near the end of the workday.
In moderation, alcohol relaxes people and can sometimes add to the fun. However, large amounts of alcohol increase dopamine, which lowers inhibitions and can lead to risky, unwanted behaviors by men and women.
The U.S. Equal Opportunity Employment Commission defines sexual harassment as “unwelcome sexual advances, requests for sexual favors, and other verbal or physical harassment of a sexual nature.” This includes inappropriate touching, actionable event under Title VII of the Civil Rights Act of 1964 when serious.
If your company invites clients to their party and they make an inappropriate advance toward one of your employees, the employee may sue your business if they feel pressured to allow it for the sake of the business. This is particularly true if the employee must attend or if there’s a strong expectation they should attend the party as a representative of the company.
Lawsuits do occur. One 2011 California case returned a quarter-million dollar verdict in favor of the employee, but it was later overturned. However, the employer probably spent tens of thousands of dollars in legal fees.
Your company may also be “liable for harm done by the employee within the scope of employment, whether the act was accidental or reckless.” “Respondeat superior”, Latin for “let the master answer” establishes liability if your employee must attend a party within the scope of their employment or it is reasonably expected.
For instance, a 2013 California case found the employer liable for an employee’s motor vehicle accident, after he killed a person he struck. The court found the party and drinking of alcoholic beverages were not only of a conceivable benefit to the employer, but were also a customary incident to the employment relationship.
Employers often invite employees to bring their families to holiday parties. This can create a potential problem – underage drinking. Even if you hire a bartender and insist they ask for identification, young people may get their hands on alcoholic beverages.
If your business furnishes alcohol to an underage person and they get in an accident that causes serious bodily injury or death, the law can charge your business with the crime and repercussions may include a fine and imprisonment.
With so much at stake, it’s smart to try and find ways to reduce your risk. Here are a few ways you can protect your company from liability:
- Don’t serve alcohol, restrict hours of service, or limit consumption through drink tickets.
- Ensure all party notices include a disclaimer stating attendance is voluntary and not a requirement of employment.
- Don’t mix business and pleasure – business awards and bonuses are business-related activities.
- Don’t ask employees to perform special duties at the party.
- Host your event off-premises – the venue obtains the liquor license and assumes liability.
- Provide non-alcoholic beverages and food.
- Arrange designated drivers or taxis.
- Review sexual harassment policies and train supervisors.
- Set a start and end time for the party.
Discuss your risks with your independent insurance agent. They can recommend additional coverage for events at a reasonable cost so you can relax and enjoy your event.