Planning Your Company Holiday Party? How to Avoid Potential Legal Problems...
The holidays are truly a special time of year when we celebrate the season with family, friends, and colleagues. Many companies choose to sponsor a holiday gathering to reward employees for their hard work and allow them to socialize with colleagues. In general, holiday parties are a great way to build community and even communicate corporate values. But if not handled correctly, they can create liability. Helios sat down with Ryen Rasmus, Associate Attorney with Berenzweig Leonard, to talk about how to manage some of the risks associated with the holiday season for employers.
Helios: I’d like to start by asking a general question: why do employers need to be mindful around the holidays with respect to office parties?
Ryen Rasmus: A lot of the issues can be understood by applying common sense. Whenever you have an office event outside of the office, there’s a degree of informality that makes people behave in a way they might not in a more formal office setting. It’s often exacerbated by the presence of alcohol. Alcohol can be a great social lubricant, but at the same time, it can cause people to behave in a way they wouldn’t in the office – and perhaps not even in their personal lives. Because of that, you can get into a situation very quickly that puts not only employees at risk, but the employer as well.
Ryen Rasmus: The obvious answer is not to have alcohol at your holiday party. A lot of employers balk at that idea because they see alcohol consumption as intrinsic to the idea of what a holiday party should be. However, there’s a tremendous amount to be said for the risk mitigation of cutting it out altogether. If you want to serve alcoholic beverages, there are many strategies to mitigate risk, starting with something as simple as moving up the start time of the party – to 2 PM, for instance, rather than 6 PM. Not only will everyone get a half-day off from work, which usually goes over well, it’s also less socially acceptable to drink earlier in the day, so employees may tend to drink more moderately. Inviting significant others can also help, as it makes the entire affair less intimate and can put people on their best behavior. In terms of limiting alcohol or its effects, you can also offer a limited number of drink tickets. You can and should also engage professionals to actually serve the drinks, as this can cut down on agency liability – that is, the argument that it was the employer who served the alcohol and should therefore be liable for subsequent negative outcomes. Finally, a cutoff time or last call well in advance of the actual end of the party can be an effective strategy.
If you do realize that someone has had too much to drink, transportation becomes an issue, so employers should be prepared to offer options like carpools, reimbursement for taxis, or access to a firm Uber account. You can also consider having ‘spotters’ on hand to monitor your attendees and address issues quickly and help manage the party flow. If you want to have company employees act as spotters, ensure that you select trustworthy people from the management level who are classified as exempt, otherwise this could be considered compensable time worked.
Helios: In general, how can employers mitigate risk when holding events outside of normal working hours or when they require that employees travel?
Ryen Rasmus: You want to make sure that you understand the Department of Labor’s definition of compensable time. Whether an event is entirely voluntary is an important factor in determining whether attendance can be considered compensable work time. It’s a good idea to include a disclaimer when inviting employees to unpaid events outside of work such as, “we hope that you will join us but attendance is not mandatory.” While this may seem like a throwaway line, it can actually go a long way towards establishing that employees are there of their own free will, and, therefore, that the employer is not responsible for paying them for time spent at the event. You also want to be clear that the only incentive for employees to attend is a social incentive. For example, you don’t want to do something like hand out bonus checks at an extracurricular activity.
Many employers, very presciently, send out a holiday party or office party memo that lays out some of these issues and provides clarity on how the employer is characterizing the event. It may seem awkward, but this strategy is really to the employer’s advantage because it protects company interests.
Helios: Lastly, how do employers protect themselves from the liability that may arise from employees engaging in inappropriate social interactions during office parties?
Ryen Rasmus: Here again, to the extent that you can control the volume and manner in which alcohol is being served, you can try to exert control over the behaviors you might see when alcohol is abused. You also want to avoid anything that may encourage inappropriate or unprofessional behavior, such as mistletoe or a dance floor – it simply opens the door to liability. In addition, you should make sure that the regular sexual harassment and religious non-discrimination policies are being observed at extracurricular activities, and consider reminding employees that company policies apply at all company events, even those that take place after hours. While there is a differentiation to be made between off-the-clock inappropriate behavior and harassment in the workplace, courts ultimately look at the overall culture of the company in determining whether there’s an tolerant attitude toward harassing behavior. For these reasons, you want to take decisive action both to prevent issues from arising in the first place and follow up on any complaints that are made. This will show that you comply with your own policies and that you take allegations of harassment seriously.
We hope that these tips are helpful as you plan your 2014 holiday parties. We thank Ryen and Berenzweig Leonard for the expertise they’ve shared.