Dreaming of a Liability-Free Holiday Season

This time of year, many employers hold their annual office holiday party. Unfortunately, some of these parties lead to liability for harassment, hostile work environment, wage-and-hour violations, or even drunk driving accidents.

Employers should start planning ahead for holiday events, and develop clear policies now to prevent legal claims in January.

Not So Silent Nights

A 2011 survey conducted by Harris Interactive on behalf of Caron Treatment Center, a nonprofit provider of alcohol and drug addiction treatment, found that more than half of those surveyed reported seeing someone under the influence of alcohol exhibit inappropriate and even dangerous behaviors during a work-related outing.

These behaviors included flirting, arguing or fighting, drunk driving and sexual contact. Social media may exacerbate the problems of workplace misbehavior: one night’s drunken revelry could end up on Facebook or Twitter, and be visible to co-workers, managers, and clients.

“Employers should start thinking now about how they want to manage holiday parties,” said Erika Frank, CalChamber’s general counsel and VP of Legal Affairs. “Alcohol-fueled mistakes could have a lasting impact on individual careers or on the business as a whole.”

The Grinch who Stole the Eggnog

California courts expanded employer liability for drunk driving accidents following company parties. As a result, many employers may choose to serve only non-alcoholic beverages at their events. See Alcohol at Workplace Functions on the Drug-Free Workplace Policies HR Library Page for more information.

In a December 2009 case, a California court found an employer liable for a drunk driving accident that occurred long after the party had ended. Marriott Del Mar Hotel (Marriott) held its annual holiday party for employees and management.

The party was held at the hotel. Marriott planned to serve only beer and wine and to provide two drink tickets to party attendees. Attendance at the party was voluntary. Even though only beer and wine were supposed to be served, the general manager for the restaurant was bartending the party and had a bottle of whiskey brought to the bar from the hotel’s liquor supply. The general manager filled employee Michael Landri’s flask with whiskey on at least one occasion (maybe more), shared shots with him and served whiskey to other guests.

Landri left the party with some co-workers. He “believed” he didn’t drive home, and that his co-workers drove him. He did not drink any more after leaving the hotel party.

After being home for about 20 minutes, Landri decided to drive a drunk co-worker home. While doing so, he rear-ended a car at more than 100 miles per hour, killing the driver of the other car. Landri’s blood alcohol level at the time of the accident was .16.

Landri pled guilty to gross vehicular manslaughter while under the influence and received a six-year prison sentence.

The parents of the deceased driver sued Landri and Marriott for wrongful death. Marriott argued that it could not be liable for Landri’s actions because he was engaged in purely personal conduct when he left home after first arriving there safely. Marriott also argued that Landri’s travel was unrelated to work. Generally, employers are not liable for the wrongful acts of employees that occur outside of the employment relationship.

The court disagreed because the consumption of alcohol that eventually led to the accident was employment related and the intoxication occurred during the scope of the employment. The court ruled that an employer can be liable if the activities that caused the employee to harm others were either:

  • Undertaken with the employer’s permission and were of some benefit to the employer; or
  • A customary incident of employment.

The court stated that Marriott received at least a tangential “benefit” from the holiday party and the drinking of alcohol. The party was intended as a form of employee appreciation and was meant to improve employee morale and further employer/employee relations. The drinking of alcohol was also a customary incident of employment. The employees had permission to drink, and Marriott did not follow its own rules relating to serving only beer and wine and permitted the consumption of hard alcohol. Employees finished alcohol leftover from parties, tasted new drinks and could have drinks purchased for them, and management didn’t say anything about it.

According to the court, Marriott could not “ignore the fact that it created the risk of harm at its party by allowing an employee to consume alcohol to the point of intoxication.” Liability, according to the court, continues until the risk that was created within the scope of employment “dissipates.”

In other words, in the case of alcohol consumption related to work, the employer is potentially on the hook until the employee sobers up.

“Carefully consider whether to serve alcohol at your company parties,” said Frank. “If you choose to, put measures in place to lessen the risk of liability.”

Rockin’ Around the Nondenominational Tree

Title VII of the Civil Rights Act of 1964 prohibits employers from using an employee’s religion as a basis for employment decisions. The California Government Code also mandates that an employer cannot deny employment or any employment benefit to a worker because of his or her religion.

“Religion” in the context of these laws is very broadly defined: it includes all aspects of religious belief, observance, and practice. It also includes protections for employees who choose not to observe any religion. Some employees (and employers) go a little over the top with their holiday spirit, and these enthusiastic displays can lead to claims of religious discrimination or harassment.

“There is a risk that seasonal decorations could make non-observing employees feel uncomfortable,” said Frank.

“Employees who do not celebrate holidays may not want to be at an event with religious décor, such as nativity scenes, menorahs or Christmas trees.”

Employers should consider the needs of all their employees as they decorate their offices, and ensure that seasonal displays are unrelated to religious observances.

Similarly, employers should not require employees to participate in holiday observances, whether religious in nature (requiring employees to answer the phones with a greeting such as “Merry Christmas” or “Happy Hanukkah”) or secular (asking all employees to wear Santa hats).

Employers may establish policies governing the display of religious items, but it’s important that these policies treat all faiths consistently. State and federal laws prohibit employers from taking adverse action against an employee based on his/her religion, or preferring one religion over another. Regardless of the content of the décor, employers must treat all employees consistently, including those who choose not to celebrate at all.

“Ensure that your holiday-loving employees are not harassing employees who do not share their beliefs,” said Frank. “Snide comments about employees who do not celebrate can lead to a claim of religious discrimination.”

It’s Beginning to Look a Lot Like a Wage Claim

Whether to reduce costs or to limit drinking, many employers forego an evening affair in exchange for a holiday luncheon. If nonexempt employees are required to attend a lunchtime party, their employer will owe them a one-hour missed meal penalty.

“It doesn’t matter that the employees performed no productive work during the party or that the employer fed them,” said Frank. “If attendance is not completely voluntary, the nonexempt employees technically missed a meal period and are owed the penalty.”

After-hours parties may be considered work time as well, if attendance is compulsory. Additionally, nonexempt employees will be entitled to overtime pay if the party causes them to “work” for more than eight hours.

Exempt employees are not due any additional wages for attending holiday parties.

“Use caution before denying pay to nonexempt employees who attend a company party,” said Frank. “Party attendance is not truly ‘voluntary’ if it is an unspoken expectation that all employees will be there, or if the employees believe that they will advance their careers by networking with management at the event.”

There is an upside to considering party time “work time.” Employers control the actions of employees while they are at work, and can require professional behavior. Employees who are “on the clock” at a holiday party may be less likely to overindulge or engage in inappropriate conduct.

“Remind your employees that their actions at a party can impact the workplace, and that you therefore have the same expectations of professionalism that you do on a normal workday,” said Frank.

Best Practices

Not all companies will ban alcohol altogether.

If your company chooses to serve alcohol, the risk of alcohol-related incidents can be lessened with protective measures, such as:

  • Create and enforce a policy that prohibits employees from sneaking alcohol into a party;
  • Enforce a drink ticket policy;
  • Serve drinks for a limited time period;
  • Serve food;
  • Provide designated drivers or cab fare;
  • Holding the event off-site and using experienced bartenders;
  • Make sure that there are non-drinking individuals monitoring the situation;
  • Close the bar well before the event ends; and

Remind employees of company expectations.

Note:   This article was excerpted from HRCaliforniaExtra, an informational service of the California Chamber of Commerce.