By Craig M. Santa Maria
With Halloween behind us and shorter, colder days ahead, it’s time to begin planning for the festivities of the holiday season. For many companies, that means hosting an employee holiday party. Whether it’s snacks and drinks in the office or a gala dinner at a nice restaurant, this holiday tradition can expose your business to significant risk.
While alcohol is a part of American culture, especially during the holidays, over consumption can precipitate illegal or injurious behavior between guests, such as sexual harassment, and injuries or deaths resulting from drunken driving accidents. And if your company sponsored the event at which the offender was served alcohol, you could be held liable for damages.
James Wu, an employment attorney with Wu Castillo, P.C., in San Francisco and Walnut Creek, CA, notes that a California appellate court recently found an employer liable for the actions of an employee who became intoxicated during a company-sponsored holiday party, drove home safely, but later was involved in a fatal automobile accident when driving a co-worker home. “The appellate court overruled the trial court that originally determined the company was not liable, agreeing with the company’s contention that the person was able to drive home safely after the party,” says Wu. “However, the victim’s family appealed and the appellate court agreed that the man’s intoxication due to the alcohol consumed at the work party was a causal factor, so the company could be held liable for the fatality.”
This risk is not exclusive to holiday events. A few years ago, a company provided alcohol to employees during a company picnic, after which one clearly intoxicated employee was severely injured in an automobile accident. Others at the picnic attempted to prevent the individual from driving, but were unsuccessful. While the company was not held liable for the employee’s insurance claim, it did incur a significant cost in settling a civil lawsuit.
What are your risks?
As a business owner, you should understand your legal risks. While these laws differ from state to state, generally employers who provide alcohol at company-sponsored events are expected to exercise reasonable care to avoid serving minors and to prevent injuries or improper behavior by intoxicated guests.
Some employers avoid this risk by serving only non-alcoholic beverages at their employee events. But if you do choose to serve alcohol, Wu recommends the following things you can do to protect yourself and your guests:
- Make the event voluntary and purely social. Avoid any business related activities, such as award ceremonies or business-focused speeches.
- Ensure guests understand that rules governing employee conduct apply also at the event. These rules should be detailed in your employee handbook.
- Limit the number of drinks served to guests by using drink tickets or a similar system
- Offer a wide selection of equally attractive non-alcoholic drinks and plenty of food
- Plan a program of activities to minimize the focus on drinking
- Consider hiring a professional bartender to run the bar or host the event at a bar or restaurant with a liquor license. These professionals are typically trained to identify those who are intoxicated and limit consumption. They also incur some of the liability if an issue does arise, so be sure they are properly trained and insured.
- Close the bar at least an hour before the party ends
- Have plans in place to provide transportation home for intoxicated guests and/or hotel discounts/arrangements.
- Do not encourage or organize any “after-parties” where guests might continue to drink after the company event has ended
What if something bad still happens?
If, despite your best efforts, a liability claim does arise from an incident caused by an intoxicated guest, your property and casualty insurance coverage will likely help defray the financial costs. Because policies, laws and circumstances can vary widely, it is important that you talk with your insurance broker about your risks and coverage before your event to be certain you are protected.
Craig Santa Maria is President and COO of Santa Maria & Company (SMC), a risk management consultant and commercial insurance broker in the San Francisco Bay area with deep expertise helping companies protect what is most important to them: their assets, their employees, and their futures. Contact SMC at 925-956-7600 or online at www.smcrisk.com.
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