Written by:  William A. Earnhart

The holiday season is almost upon us and in most businesses so is the company Christmas party.  This annual rite is an American tradition that employees often look forward to all year.  Increasingly, however, it can be the source of liability for the employer and not just for serving alcohol.  Christmas and other holiday parties may be primarily social.  However, if employees are required to attend either officially or unofficially, if clients may be present, or even if the party simply increases company morale, it may be found that the party is part of employment.  This can make an employer subject to liability beyond that of an ordinary social host.  In Alaska, a social host, such as a company sponsor of a Christmas party, cannot be held liable for serving alcohol per se.  There are, however, many other forms of liability that can arise out of this type of social situation.  An employer can still be held liable for negligence, such as not providing adequate security or supervision for the gathering.  Other areas of concern include:  Workers Compensation coverage; compliance with Wage and Hour Law; Compliance with Title VII and the ADA; sexual harassment; and the general safety of employees.  With proper planning and adequate preparation, all of these potential problems can be avoided.

Liability for Serving Alcoholic Beverages

Alaska Statute 04.21.020 states that a social host who provides alcoholic beverages to another person may not be held civilly liable for injuries resulting from the intoxication.  The Alaska Supreme Court has expressly held that it will not carve out an exception to this statute for employers acting as social hosts.  However, the court will not exempt employers from other forms of negligence liability that may arise from a social situation.  The Court has upheld decisions based on failure to provide adequate security, and for negligence by an intoxicated employee while driving for the benefit of his employer. (Within the scope of his employment.)  It should be noted that “social host” does not include licensed servers.

Workers’ Compensation

Workers’ compensation covers injuries “arising out of and in the course of employment.”  If employees are in any way required to attend a social gathering, or the gathering is in the employer’s interest, workers’ compensation will likely cover injures to employees at the party.

The Alaska Workers Compensation statute was amended in 1994 to exempt sporting activities from workers’ compensation coverage.  Christmas parties are not sporting activities.

Wage and Hour

If employees are in any way required to attend a social event or the event party is in the employer’s interest, wage and hour laws are applicable.  The Alaska Department of Labor has adopted the federal standard for the applicability of wage and hour laws to attendance at meetings outside of work time, 29 CFR § 785.27.  Essentially wages must be paid if the holiday party is during normal work hours or attendance is not fully “voluntary.”  

Title VII and The Alaska Human Rights Act (AS 18.80)

Employers must recognize that some employees may not share their employer’s holiday spirit and desire to celebrate Christmas.  Christmas is, after all, a religious holiday despite the retail hype.  An employer must be careful to be sensitive to an employee’s feelings on this issue.  Although there are no hard and fast rules, it is a good idea to keep official functions primarily secular, if not wholly secular, unless the feelings of all employees are truly known on this issue.  An employer cannot discriminate against an employee on the basis of religion.

Discrimination includes limiting, segregating or classifying employees in any way that would deprive or tend to deprive an individual of employment opportunities.  42 USC § 2000e-2.  If an employee voices strong objection to attending the company Christmas party, they should be allowed to perform some other function during the party.  It should be made clear that non-attendance will not affect the employee’s current duties or possibility of future promotions.

ADA

An employer must be careful that all employees will have access to the Christmas party.  This may even include access for spouses or guests with disabilities.  An employer cannot discriminate against an employee on the basis of disability.  Discrimination includes limiting, segregating, or classifying employees in any way that would deprive or tend to deprive an individual of employment opportunities.  42 USC § 12112.

Accordingly, employers should make reasonable accommodation to allow spouses and guests to attend holiday parties.

Sexual Harassment

It is unlikely that a single incident at a holiday party will be a violation of Title VII.  However, a social situation, especially where alcohol is served, may create an atmosphere which will lead to problems that evolve into a hostile or discriminatory situation in the workplace.  What is acceptable conduct at a holiday party may be more relaxed than conduct under normal working conditions.  However, sexual harassment guidelines still apply.  An employer should make this clear to all employees.

If a harassing situation does occur at a holiday party, an employer must take prompt and appropriate action.  With respect to contact between fellow employees, an employer is responsible for acts of sexual harassment in the workplace where the employer (or its agents or supervisory employees) knew or should have known about the conduct, unless it can show that it took immediate and appropriate corrective action.  29 CFR § 16704.11.  An employer will be responsible for harassment conducted by its management.  This does not mean that an employer should ban all intraoffice social relationships.  Relationships between men and women are an integral and important part of our society.  An employer, however, must control unwelcome sexual advances, actions or discussions, and must closely monitor potential problems, e.g. employee/supervisor relationships.

Checklist:  How to Avoid Problems at Your Holiday Party

  1. To avoid problems with holiday parties, anticipate situations before they become problems. Preparation and common sense are essential:
    • Is there adequate supervision?
    • Are responsibilities for supervision at the party clearly defined?
    • Is someone with supervisory authority present, sober, and able to deal with potential problems as they arise?
    • Is there control of who enters and exits the party?
    • Is there control over the dispensation of alcohol to prevent minors and intoxicated persons from drinking?
  2. Make sure that food, especially protein rich and starchy food, is available to control alcohol abuse. Food not only lessens the effects of alcohol, but also tends to slow down drinking.
  3. Consider having activities such as dancing available. This will tend to slow down drinking and may add to the fun.
  4. Make sure employees who may have work responsibilities later that day are not drinking.
  5. If the party is held at a remote location, is there adequate safe transportation to return people home?
  6. If the party is during working hours or employees are required either officially or unofficially to attend, are the employees being paid?
  7. Are all employees adequately informed as to rules on sexual harassment?
  8. Are the party’s theme and decorations primarily secular? If not, will anyone be offended?
  9. Is the party located so that it is accessible to all employees and their spouses or guests?
  10. Are there adequate non-alcoholic beverages available?
  11. When the location of the party is chosen, survey the location for accessibility and potential hazards.
  12. Immediately before the start of the party, survey the location for accessibility and potential hazards.
  13. Make sure a phone is available as well as phone numbers for taxi cabs to assist intoxicated persons to return home. Consider cab vouchers.
  14. Make sure no one is being put in a position where they feel they are forced to drink.
  15. Remember, it takes about an hour for the effects of one drink to wear off. Cold showers and coffee do nothing to sober anyone up.  They only make a wide awake drunk.
  16. Have fun!

William A. Earnhart is an attorney with the law firm of Birch Horton Bittner & Cherot in Anchorage.  His practice emphasizes employment and labor advice and litigation on behalf of employers.