Eat, Drink and Be Wary:
25 Steps for Managing Holiday Party Liabilities
If Grandma got run over by a reindeer, you had
better hope the reindeer wasn’t drinking at your holiday office party. Alcohol leads
a sleigh full of employer liabilities right to your holiday festivity and is
capable of running over morale, careers, solvency, and at worst, lives. Employers
want to host holiday celebrations and want their employees to have a good time,
yet they also want people to act responsibly and stay safe and healthy to enjoy
the New Year. Proper party planning can make sure they do, and proper insurance
can protect your business if they don’t. You can relax in the knowledge that
litigation relating to holiday parties is not rampant. Nor are insurance
claims. A competent manger knows about exposure, liability, and risk management
even though there will probably not be a need to apply it. So…
Exercise Pre-party
Due Diligence
1. Review your general liability
policy with your insurance agent.
“It can be tough to read an
insurance policy and figure out what you’ve got,” says Alan Convey, ARM, CRIS,
vice president, commercial, at Gallen Insurance. “Talk with your insurance
agent and they can help you figure it out.”
In particular, you’ll
want to be certain about your alcohol-related coverage. “Host liquor liability”
coverage is an unendorsed inclusion in general liability plans. Should a guest
over-imbibe, the insured is protected from claims made by people injured by the
intoxicated person. The majority of general liability policies include host
liquor, but some don’t. If you’re “in the business of manufacturing,
distributing, selling, serving or furnishing alcoholic beverages,” then your
business is excluded from host liquor coverage under general liability policies.
Sexual harassment claims—common when alcohol is involved—are
covered under Employment
Practices Liability Insurance, not general liability. Some insurers
provide this coverage as an endorsement to their directors and officers policies;
other companies offer EPLI as stand-alone coverage.
“The other type of coverage that
can come into play is workers’ compensation,” says Sheri Riley, AAI, vice
president, programs, Murray Insurance. “In Pennsylvania, if your employees are
perceived to be doing something that is furthering your business and if they
are hurt doing that then that may be covered under workers’ comp.”
2. Team with your insurance agent to review
vendor contracts.
Prudent review of event contracts
before you sign should be a given. But many businesses zero in on price and
deliverables rather than verify issues of liability.
“Before you sign the contract,
send it to your insurance agent and ask them to take a quick review,” advises
Theresa Kane, an account executive at Wells Fargo Insurance Services of
Pennsylvania. “We’re not attorneys, but there are certain things we can pick up
just by looking at it.”
“Sometimes also on these contracts there is a waiver of
segregation,” Theresa Kane further explains. “For example, if you are rear-ended
in a car accident, your insurance company may pay for your medical costs first,
but they are going to go against that other insurance company to get back the
money they paid you. It’s called segregation.”
If the facility you’ve rented gives the dance floor a super
polish and then Nick from accounting twirls his wife on the dance floor and she
falls and gets hurt that could be the facility’s negligence. But if there’s a
waiver of segregation in the contract, your insurance company has no recourse
to collect against the facility.
Certificates of insurance are
common in special event agreements. The facility or caterer wants proof that
your business has general liability insurance and that they have been named as
an additional insured.
Agents advise businesses also to
require proof of general liability and liquor liability insurance from event vendors
and to negotiate to have your business named as an additional insured under the
vendor’s policy.
“If businesses aren’t sure how to
ask that question, they should go to their insurance agent and the agent can
tell them how to do it—and can even check the certificates and
documentation received from the caterer or restaurant,” says Alan Convey.
3. Set clear expectations.
Prior to the event
—in internal communications and meetings—stress that the party is a
work function and that the same personnel policies and procedures that apply
during the normal business hours also apply at the holiday party. Emphasize
that inappropriate behavior such as intoxication and lewdness will not be
tolerated. Have additional communication with management personnel about setting
an example for standards of behavior and going over how to intervene should misconduct
occur.
Establish a
Professional Party Atmosphere.
Where liquor freely flows so does libido and
bravado. Sheri Riley points out that in addition to holiday times, exposure
is the same at company picnics, fundraisers, and other gatherings where alcohol
is typically involved.
“Employers
have been rethinking holiday parties as there has been more concern about alcohol
issues and sexual harassment,” says David Keller, a partner at Barley Snyder
LLC. “With alcohol people lose their inhibitions and do things they may not
otherwise do, which includes making unwelcome sexual advances, and especially
where the offender is a manager or supervisor of the employer the possibility
of successful legal action is high.
“We see very little litigation about alcohol related
problems at such parties. The law in Pennsylvania makes it difficult to hold a
social host liable for serving alcohol to an adult. It is different in the case
of minors. Serving alcohol alone is not enough to hold a company liable,
and it is likely that liability will be found only if the host had reason to
know that the person was intoxicated, and perhaps if the host should reasonably
have known. Thus far, courts’ holding employers liable has not been a
deterrent, but employers are much more sensitive to safety issues generally and
to the possible publicity attendant to a serious accident arising from a party.”
Jody Shelby, a shareholder at Stevens & Lee, agrees. “Outside the legal analysis, companies should
really look to the practical side of the issue and what harm any accident would
cause with public relations, internal morale, and the like.”
If serving alcohol,
create a culture where over-imbibing and sexual harassment are not permitted.
4. Have professionally
trained bartenders serve alcohol.
Professional bartenders
typically have received formal awareness training to detect signs of
intoxication and prevent associated problems. Also, notify the bartender to avoid
doubles and cut off any visibly intoxicated guests.
Michael Kelley, esquire, McNees Wallace & Nurick LLC, explains
that in the language of the law, “visibly intoxicated” does not depend on
blood-alcohol content or number of drinks. “Essentially what you have to show
is at the premises that the person was displaying signs of intoxication: blood
shot eyes, slurred speech, trouble walking or standing up or sitting, maybe
loud and boisterous.”
5. Assign party marshals .
Designate management-level employees who shouldn’t drink to monitor how much
alcohol guests are consuming and watch for problems.
“Be your own bouncer,” says Murray
Insurance’s Sheri Riley.
6. Serve beer and wine only.
Hard liquor makes
people get drunker faster.
7. Enforce drink limits.
Consider drink tickets to curb drinking; two tickets per person perhaps.
8. Monitor minors.
If you employ people under 21,
make it clear that underage drinking won’t be tolerated and alert bartenders to
the fact that minors are attending.
“Courts will absolutely extend liability on social hosts who provide alcohol to
minors. They have been reluctant to do so when the alcohol is provided to
someone of age because that person is an adult and has their own judgment. It
is a practical issue that all employers should be cognizant of regardless of
whether there is ultimate liability or not,” says Jody Shelby.
9. Celebrate during business hours.
Social gatherings during business hours mitigate tendencies to over drink.
Consider hosting a breakfast or lunchtime gathering or close the office for an
afternoon buffet. Even a weeknight celebration can be effective.
10. Serve plenty of food.
Alcohol consumed with food is absorbed more slowly than alcohol consumed on
an empty stomach.
11. Plan activities.
Activities limit people’s focus on the bar giving them something to do besides
drink. Perhaps
a themed event such as a skating party or something to support a charity.
12. Have a last-call.
Stop serving alcohol several hours before your party ends; serve more food and
alcohol-free drinks.
13. Arrange transportation home.
Schedule designated drivers, shuttles, or provide car or taxi service. Also
plan to have cash on hand for those who didn't foresee the need for taxis. It's
not enough to just ask your inebriated guests if they'll be okay as they're
leaving.
“If they are visibly intoxicated,”
explains Michael Kelley, “it doesn’t matter whether you thought they had a ride
home, it doesn’t matter whether you thought they were going to be in a car
driving home or not, you have an obligation to make sure they get home safely.
Call them a cab, call a family member to come get them and to make sure you
physically watch them as they get into the cab or into the sober family
member’s automobile to go home, or if they live nearby have a sober person walk
them home.”
14. Avoid overnight accommodations.
Liquor and bedrooms are not a good combination.
Barley Snyder’s Dave Keller has “known
of more situations where employers have held the event at a hotel where rooms
are available to avoid having employees drive after imbibing, but in those
cases the sexual harassment issue raises even more concerns. There is not
only the potential for legal liability where two employees go to a room
together—force/consent issues or regretted sex can all lead to
those—but also the issue of working relationships after the evening is
over.”
Here’s more party-planning sex
education.
15. Invite spouses.
Spouses, significant others, and even children keep employees on their best
behavior.
16. Avoid slow, sensual music.
“Santa Baby,” “I Saw Mommy Kissing Santa Clause,” or anything Barry White is
asking for trouble.
17. Boycott mistletoe.
Even Santa isn’t safe—run from anything that encourages kissing, hugging,
or touching.
18. Have a dress code.
Suggest attire that keeps things professional rather than provocative.
Secure a Plan for Emergencies.
The range of inappropriate conduct is broad and how to
intervene varies as a result.
“It depends on the situation, but if it is somebody who has
had too much to drink and is falling down drunk—or in the words of the
law ‘visibly intoxicated’—you as a supervisor, a manager, an owner of a
business have a responsibility to step in to remove the person from that
environment and make sure they get home safely,” Michael Kelley explains.
You can game-plan for emergencies by talking with management
about how to handle such situations. Here are some points for that meeting’s
agenda.
19. Intervene.
Someone with authority should respond immediately and have reliable back up in
case you need to actually take someone's keys away in the case of intoxication.
Also, take claims of sexual harassment seriously.
“Even if an employee comes to you in an informal setting and
reports a claim of what they believe is harassment, it doesn’t matter if the
setting is informal,” cautions Michael
Kelley. “You still have a duty as a supervisor to follow up and act upon
that report just as if they made this report in a business setting.”
20. Obtain both sides of the story.
Also talk to the alleged defender to get his or her side of the story.
21. Document.
Within the next day, make notes of the happening and related conversations.
22. Consult with legal counsel.
23. Take action.
Based upon the outcome of all talks, follow up and take action, up to and
including firing the problem employee.
24. Be fair.
Treat same-sex harassment and men reporting harassment the same way you would
treat women reporting harassment.
Maybe
We’ll Give Fruit Cake Instead
Before you cancel the festivities, know that litigation relating
to holiday parties is not rampant. Most people don’t go to office holiday
parties just to drink or hook up or act foolish or get hurt, but you need a
plan to mitigate potential problems. Even if claims don’t evolve into liability,
episodes arising from misconduct in business social settings cause bad publicity,
affect morale, and can be embarrassing, inconvenient, and expensive.
David Keller underscores that “employer officials will spend
a great deal of time planning and executing their defense, and legal costs
including time spent defending at administrative agencies and in court can
easily reach six figures. Employers may or may not have insurance that
covers all aspects of these claims. Even a claim without legal merit can
be very costly.”
“Do a risk management thing not an insurance thing,” reminds
Sheri Riley. “Make sure your employees are safe and treated with respect.”
Taking a smart and practical approach to your holiday office
party will allow you to spread cheer and maintain a safe and healthy environment
for your employees. Doing so also enables you to cross off the last checklist item…
25. Rest assured and enjoy
the holidays!
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