Limiting Your Liability During the Company Holiday Party

With the fallout from the #MeToo movement forcing employers to change their internal conduct policies, they are also reassessing the office holiday party.

While gatherings can be a good time for your staff to mingle casually with their colleagues and clients, they can also prove to be a liability for businesses – particularly if you serve alcohol.

Not all companies are canceling holiday parties, though. Some are being a little more careful and limiting or eliminating alcohol served at holiday celebrations.

If you are throwing a holiday party, you should take steps to limit risks and make sure you are protected with proper insurance coverage.

Your biggest concern should be intoxicated workers leaving the party and driving. Almost all states have liquor liability laws that allow an injured third party to sue not only the person who injured them or damaged their property, but also the individual or organization that overserved them alcohol.

While these laws were originally written to cover bars and other establishments that serve alcohol, they have been extended to cover “social hosts,” which include:

    • Employers that hold events where they serve alcohol.
    • Individuals or groups that hold events (including weddings and summer barbeques).

Limiting your liability

Experts recommend that you take steps to limit your liability:

  • Lay down the ground rules – You should hold a meeting and create documentation for your employees to sign that spells out their duty to act responsibly and treat all other staff with respect. This should also include advising them to drink in moderation and not drink and drive.
  • Lead by example – Management should model the behavior they expect from everyone at the party: polite conversation and drink in moderation, if at all.
  • Hold the party offsite – This is a smart move because if there are issues that occur, it’s best they don’t happen at your place of business.
  • Consider not serving alcohol – This is the safest bet to ensure you are not vicariously liable for any intoxicated employees.
  • Use different approaches if you serve alcohol – If you do plan to serve alcohol, consider requiring your staff to pay for drinks. This also has the effect of people drinking less if it’s on their dime. Another option is to issue drink vouchers to limit the amount of drinks each person can have.
  • Hire a professional bartender  – Most bartenders are trained to detect signs of intoxication and are better able to cut someone off in a professional and polite manner.
  • Offer alternative beverages  – You should also offer non-alcoholic beverages, and always serve food so people don’t drink on empty stomachs.
  • Stop serving towards the end of the party  – Stop serving alcohol at least one hour before the end of the party, and instead bring out the coffee, tea and soda.
  • Arrange transportation  – If you are serving alcohol, you should make special transportation arrangements before the party. Encourage your employees to take advantage of the transportation for their and the public’s safety if they have had drinks.

Insurance considerations

If you have liability concerns, you should call us to discuss your current commercial general liability coverage to make sure that it doesn’t have any exclusions or conditions for these kinds of risks.

If you have gaps, you may want to consider special event coverage that would cover liquor liability and other liability exposures specific to the event.

We can help you check your policy to see if liquor liability is covered by your CGL policy.

If there is any harassment at the party that could put you in the crosshairs for a harassment lawsuit, you could also be sued. This kind of action would not be covered by your CGL policy, but it would be covered under an employment practices liability insurance policy.

An EPLI policy will extend coverage to your business for any discrimination, sexual harassment, emotional distress, and other workplace-related charges. The policy should include third party coverage, which covers claims made by non-employees, usually clients or customers, who allege that an employee engaged in wrongful conduct such as sexual harassment or discrimination.

MeToo Movement to Spawn Wave of Sexual Harassment Lawsuits

After revelations of sexual misconduct by a number of high-power executives, media personalities and politicians last year spawned the #MeToo movement, defense lawyers are predicting a record number of sexual harassment lawsuits will be filed against employers in the coming year.

The #MeToo movement has emboldened women who have been sexually harassed, abused or worse by a work superior or co-worker to come out and tell their stories. Any employer whose workers were subjected to this kind of behavior is at risk of being sued, regardless of whether or not the employer knew about the incident.

The costs of sexual harassment lawsuits can debilitate, if not sink a small business, considering the high settlement costs, attorney fees – and even awards if the cases go to trial.

As an employer you should already have anti-harassment policies in place, including a safe way for an employee to report harassment without fear of losing their job. In the #MeToo era, you should revisit your policy and consider new training for all employees, supervisors and management. Companies must be ready to quickly address sexual harassment, assault and discrimination in the workplace as it is uncovered.

 

What’s happening

A movement that started out in very high-profile, public industries and in politics will soon spread into the hallways of everyday American businesses.

The #MeToo movement has exposed unacceptable predatory behavior in the workplace. It has also shown that there is no room for tolerance of sexual harassment.

There are different types of sexual harassment and as an employer you should be aware of the differences.

Title VII of the Civil Rights Act of 1964 is the federal law which prohibits employers from discriminating against employees on the basis of sex, race, color, national origin, or religion. Sexual harassment is a form of sex discrimination in violation of Title VII.

Sexual harassment can include one or more of the following:

  • Unwelcome sexual advances
  • Requests for sexual favors
  • Visual, verbal or physical conduct that is sexual in nature.

There are two main types of sexual harassment in the work environment:

  • Quid pro quo, when usually a superior will make sexual advances or requests as a condition of employment or promotion. This could include a manager threatening termination unless the employee performs sexual favors, or a manager promising a promotion in exchange for sex.
  • A fellow employee or superior that may engage in unwanted physical contact, making vulgar or obscene comments, making sexual requests – or in the worst case, rape.

Companies must address sexual harassment through anti-harassment policies and sexual harassment prevention training with the goal of ending harassment rather than just attempting to avoid litigation. The training should be continuous and engaging.

Employers must create and communicate sexual harassment policies and promptly investigate all sexual harassment claims thoroughly.

Businesses should also have a fair and confidential system in place for reporting sexual harassment without risk of retaliation. All complaints should be taken seriously and investigated thoroughly.

Punishments must only been meted out after the investigation, and the punishment should fit the infraction, including firing if need be.

 

The final backstop: Insurance

Employers need to protect themselves financially from liability, but also create a safe work environment. Employment practices liability insurance (EPLI) will cover many of the costs associated with a sexual harassment action by an employee, including:

  • Legal costs
  • Settlements
  • Jury awards

In addition, in order to provide a legal defense and pay damages, some EPLI policies may include resources to help business owners create policies and procedures, training and awareness campaigns that may reduce the potential for future claims.

EPLI policies actually go further than just sexual harassment and discrimination. They also cover similar expenses associated with lawsuits alleging:

  • Discrimination
  • Wrongful termination
  • Breach of employment contract
  • Emotional distress or mental anguish
  • Invasion of privacy