Forewarned is forearmed
Employers and their HR teams must be aware of the risks and potential liabilities associated with company events to protect themselves and their employees.
The most prevalent risk comes from inappropriate social interactions, namely, sexual advances among co-workers. Title VII of the Civil Rights Act of 1964 prohibits sexual harassment by an employer, including conduct that is unwelcome and sufficiently severe or pervasive. Though the Act offers no protection as between workers, an employer who fails to provide a safe work environment can run afoul of this federal law.
Dangerous conduct by employees creates the risk of physical damage to person or property. When an employee is injured at a company event, he or she may have recourse against the employer for unsafe work conditions. An injured third party may also be able to sue an employer for an employee’s actions under Ohio’s social host or dram shop laws or other legal theories, such as the doctrine of respondeat superior (let the master answer).
Often overlooked, loss of good will is a serious matter and is more likely to happen to employers with undeveloped social media policies. Social media gives employees a platform to post company party interactions, both good and bad, and negative publicity can tarnish any company’s reputation.
Neutralizing the alcohol factor
Unsurprisingly, the greatest contributor to risky behavior is alcohol. If you decide to permit alcohol at your company’s social event, consider taking the following steps to mitigate risks associated with alcohol:
- Distribute drink tickets or set a drink limit for attendees.
- Skip the liquor—limit drink selection to “softer” alcohols like wine or beer.
- Close the bar early to limit access to alcohol.
- Ask bartenders and/or supervisors to be on the lookout for intoxicated attendees.
- Arrange for transportation to and from an event.
- Incentivize employees to be designated drivers.
- Provide hors d’oeuvres to curb alcohol consumption.
- Limit attendance to 21 and over.
Accounting for venue
Incidents are more likely when company events are held off-site. This is due in part to preconceived standards of behavior in a familiar work setting, given that employees are used to behaving professionally in the office. However, keeping things in-house does place a bigger burden on the employer to monitor alcohol consumption and other activities.
For company socials held on-site, consider hiring a professional bartender or food vendor, and assign supervisors to monitor the festivities. For outside venues, be sure to choose one that sends the right message about the type of event it will be. Consider choosing a restaurant instead of a karaoke bar, for example. Always be sure to confirm that all venues and service providers have the proper licenses.
Another good way to set standards is with an appropriate dress code. A black-tie affair necessarily invokes a different atmosphere than a business casual event, and in most cases, a clear dress code can nip inappropriate or suggestive behavior in the bud. You should also have a keen eye for decorations, which should be neutral and considerate of the religious and cultural beliefs of your employees—especially during holiday parties.
Building the guest list
First and foremost, employers can avoid the risk of workers’ compensation and/or wage and hour claims by drawing clear distinctions between social events and employment functions. Employers should make it clear to employees that there is no work purpose for the social event and that attendance is always optional. Toward that end, employers should try to schedule events outside of normal work hours and avoid talking business or handing out performance awards during the event.
Employers should also consider whether to invite guests such as significant others, family members, or general plus-ones. A strictly in-house social lends itself to riskier behavior because of the obvious familiarity that already exists between attendees. A broader guest list, in contrast, can foster a more reserved, conservative dynamic which, in turn, may deter unwanted behavior.
Employers should also strongly consider omitting their independent contractors from the guest list if the social event is “company only.” An employer’s everyday liability is generally higher for an employee than it is for a contractor, and the main distinction between the two boils down to how the employer interacts with its employees versus its independent contractors. In other words, inviting independent contractors to company events invites potential liability for misclassification of contractors as employees.
Before company events, employees should be reminded that the setting will be social but still professional. Any well-written employee handbook will set this expectation as a matter of course.
Event policies, for that matter, should be clear and consistent with all other policies. Social media policies, for example, should set consistent standards for posts related to or depicting alcohol and other potentially inappropriate media. To the extent that social media posts are fully public, employers may consider monitoring and requesting removal of posts that may suggest affiliation with the company but fail to adhere to its policies.
More touch points can be an effective way for employers to reinforce expectations leading up to company events. For example, pertinent sections of the employee handbook can be recirculated to employees via email, or these policies can be discussed at regular meetings, or included on inserts that accompany paychecks.
Investing in a failsafe: Insurance
The best-laid preparations can still be undermined. Insurance should be a last line of defense against liability but it may be desirable, even if only for peace of mind. Employers might consider the following policies when budgeting for an event:
- General event insurance—protects against losses due to injury or damage by insured’s employees or agents.
- Liquor law liability insurance—covers insured against accidental furnishing of alcohol to underage or already intoxicated patrons.
- Cancellation insurance—helps cover costs when an event must be cancelled for a variety of reasons.
- Venue insurance—covers for damage to a location while it is under the insured’s control, effectively insuring against repair costs to the venue.
- Hired/non-owned auto insurance—provides liability coverage for vehicles rented for the event, as well as auto-related injury or damage to third parties.
- Employment practices liability insurance (“EPLI”)—covers businesses against claims by workers that their legal rights have been violated.
EPLI can be a good catchall insurance that might protect employers from losses occasioned by activities that compromise a safe work environment, including sexual harassment, discrimination, wrongful discipline, and wrongful infliction of emotional distress, among others.
This article is meant to be utilized as a general guideline for company social events. Nothing in this blog is intended to create an attorney-client relationship or to provide legal advice on which you should rely without talking to your own retained attorney first. If you have questions about your particular legal situation, you should contact a legal professional. Max Julian is an attorney at The Gertsburg Law Firm. Julian’s practice is focused on commercial litigation. He can be reached at email@example.com or by phone at (440) 571-7541. The Gertsburg Law Firm blog has more than 80 articles on topics covering Employment Law, Consumer Law, and ways to protect your business.