Holiday party planning: Avoid the lawsuits

OfficeParties_AffairsIt’s the scenario no boss wants to deal with: A manager at the annual office holiday party has a little too much to drink. He hits on every woman in the room — and even grabs a client invited to the party and kisses her.

In the cold light of the morning after, bosses are left with a choice to make. Does the offending employee get fired? Disciplined? How do you stop it from happening again? Can the company be sued?

“I always tell business owners, ‘Do the right thing because it’s the right thing,’” says employment attorney Glenn Schlabs with Sherman & Howard law firm in Colorado Springs. “That’s the best way to make sure you don’t face a lawsuit. Colorado law is pretty friendly to employers — but it’s better to avoid a suit instead of trying to win one.”

Schlabs has counseled clients about the problems that stem from bad behavior during company holiday parties. In some cases, he says, it’s right to fire the offending staffer.

Kim Koy, director of the regional office for the Mountain States Employers Council, says there are ways to plan the party to avoid the most common pitfalls and their accompanying legal problems before they happen.

Alcohol use

The most common party foul at any office party has to do with people drinking too much, Koy says. Too much liquor can lead to traffic accidents, DUIs and, sometimes, deaths.

“Companies should limit alcohol,” she said. “Have drink tickets and let people have two drinks each. Something like that — and don’t have it at the office. That’s asking for problems.”

Schlabs said that his recommendation is to avoid alcohol completely during company parties.

“What’s going to happen?” he asked. “No one will come? That’s probably not the case.”

If there is going to be a bar at the party, the best approach is to have it at a restaurant or hotel, he said. And spell it out in the contract with the facility: no serving underage people, no serving anyone who is clearly drunk.

“That removes the liability,” he said, “and it places it on the shoulders of the establishment.”

Even if the company is the one doling out the liquor, Colorado law favors the employer in most cases.

“In this case, the company is considered the social host,” Schlabs said. “And as long as they aren’t serving alcohol to minors, it limits the liability of the company.”

A Court of Appeals case about 10 years ago found a company was not liable in a case where the employer had a bar set up after-hours, he said. After a couple of beers, a worker left the office and got into a car wreck that killed the passenger.

“People sue companies, because that’s where the deep pockets are,” he said. “But the courts ruled that the company was a social host, and had no duty to the occupant of the car.”

There are ways to avoid the liquor trap, Koy says. Have it during the week, immediately after the office closes, or throw a lunchtime party. Both reduce the temptation to drink too much.

And beware — too much beer and wine can lead to the second-most-common after-party complaint, Schlabs said.

Sexual harassment suits can become an expensive problem to fix, he said.

Harassment charges

Claims of inappropriate behavior and harassment can run rampant in the aftermath of a party that spins out of control. Koy says that she frequently gets phone calls about how to prepare for parties to avoid allegations and lawsuits over harassment.

Schlabs says he has a solution: Invite spouses.

“If it’s the company’s Labor Day picnic, invite the whole family,” he said. “If it’s the holiday party, invite spouses. It’s proven to show that having spouses at the office party makes people behave better. Maybe some people should invite their moms — that’ll really make sure everyone is on their best behavior.”

“It’s proven to show that having spouses at the office party makes people behave better.”

— Glenn Schlabs,

Sherman & Howard

It turns out that spouses might be needed to police behavior. According to one study, 59 percent of office affairs start at the holiday office party.

But wanted attention isn’t the problem, Koy said. It’s those unwanted, unasked-for advances and behaviors that lead to lawsuits.

“I start getting calls in August about how to avoid some of these issues,” she said. ”And they continue all the way to January, as bosses want to talk about what happened and how to handle it.”

Limiting alcohol is one way to stop harassment claims, she said.

“The two seem to go hand-in-hand,” Koy said. “You have to limit the alcohol.”

Wages and salary

But be careful if you assign an employee to watch the behavior of other employees, both experts say. That’s because asking an employee to work during the party can lead to claims for extra pay or overtime pay.

“You have to be careful here,” Koy said. “If you make an employee work at the party, then you’re opening yourself up to wages and salary issues.”

The same problem applies if clients are invited to the party, if the boss gives out employee awards or talks about next year’s goals.

“The more it looks like work, the more you’ll have to pay it like it’s work,” Schlabs said. “You shouldn’t demand people attend and you shouldn’t invite clients.”

The point is to have fun, Schlabs said.

“You have to avoid ‘officializing’ the party,” he said. “Avoid requirements, avoid work discussions, don’t invite clients. If it doesn’t look like work, then they can’t claim it’s work. There’s a question of wages if an employee is expect to ‘do work’ like entertain clients, then it’s a good chance they’ll expect pay, and they’ll expect overtime pay.”

Workers compensation

If it doesn’t look like work, then people can’t file workers compensation claims for accidents at the party, Koy said.

“If we’re not careful, the holiday party can turn into a serious problem,” she said. “You have to avoid the issue. And it can be avoided — have the party at a bar or restaurant, don’t invite clients. Don’t expect people to work.”

If there is no expectation that this is part of the work environment, then employees can’t file workers compensation claims for accidents at the party, she said.

Companies should take the responsible tack by making sure employees are aware of the rules and the behavior expected of them.

“Give them copies of the anti-harassment policies,” she said. “Let them know what’s expected.”

Schlabs said too many people use the holiday office party as an excuse to behave badly. And that puts the office party in a bad light.

“It’s a party,” he said. “It’s supposed to be fun. But it’s not an excuse to behave like an animal.”

One Response to Holiday party planning: Avoid the lawsuits

  1. While I never considered the legal ramifications of hosting a holiday party, I have always made it an open party with family and friends, which as you have stated makes people “behave better.” Seeing it first hand I totally agree and am glad we instinctively knew that or at least had the smarts to be inclusive rather than not.

    Thanks for a great article.

    Rosana Santos Calambichis, President

    September 13, 2013 at 7:53 pm