The holidays are a time for celebration, but company-sponsored holiday parties can lead to legal trouble. The combination of alcohol, dancing and games, along with the perception that the party is not work-related can create a dangerous environment in which the employer can be hit by several types of lawsuits.
“People generally focus on liability that can be created by alcohol and auto accidents because that grabs the headlines,” says Martin J. Saunders, partner with Jackson Lewis LLP. “However, there are a lot of other issues that may create more or potentially larger liability for the company than auto accidents.”
Smart Business spoke with Saunders about how employers can protect themselves and still allow employees to celebrate.
What are some of the legal issues that can arise from holiday parties?
In the discrimination area, there is potential for sexual harassment or inappropriate jokes that are sexual, religious or ethnic in nature. But there is also liability in the wage/hour area, because when people bring suits they don’t generally bring a suit on one particular issue — they lump in everything under the sun hoping that something sticks.
For example, you may send employees out to buy party supplies during their lunch hour. Generally, if you asked the employees if they expected to be paid for that time, they would not have thought it was a big deal. The employees were on their lunch break, the store was on the way, etc. But as a matter of law, if people are engaged in work, then they are supposed to be compensated. At a later time, when the situation between employer and employee has gone south, you end up with another claim.
Sexual harassment is one obvious issue that can come up when people are consuming alcohol and view themselves as being off work and, therefore, believe the company is not responsible for their conduct. The conduct of co-workers (especially if it is a supervisory and subordinate employee) can easily create offensive working conditions and conceivably create the perception of an ‘exchange’ — that sexual favors are expected in exchange for favorable treatment at work.
How can companies limit sexual harassment liability?
Employers should have and disseminate a strong policy prohibiting sexual harassment at work and at work-sponsored events, such as parties, picnics, etc. Employers should also remind employees prior to the event that sexual harassment is prohibited. Policy distribution and enforcement are essential.
In some instances of harassment, there will be an immediate reaction. That is actually quite rare. It’s more common that no reaction happens that day or the next, but down the road when something goes sour between the employee and the company or the supervisor, then what happened at the party becomes one of many instances that are thrown up as examples of a hostile work environment.
