Take Steps to Protect Company From the Aftermath of an Office Party
Planning a holiday party for your employees? Make it a safe one for them and for your company by following some simple rules--and by reviewing your liability insurance beforehand.
Why? Because people do regrettable things at holiday office parties, especially when they drink too much. If you’re like many other business owners, you err if you mistakenly think that your liability insurance automatically covers you against the hazards.
In fact it probably doesn’t, and it’s important to plan just as carefully for a company social outing as for any other business function.
This starts with making sure just what your liability coverage covers with respect to employment issues, according to Arthur F. Silbergeld, a partner in the Los Angeles office of the law firm Proskauer Rose, past chairman of the labor and employment law section of the Los Angeles County Bar Assn.
Silbergeld offers the example of the employer who stages a holiday party as a business, not a purely social, gathering and makes attendance compulsory. Things get out of hand and a manager, having had one drink too many, speaks profanely to an employee.
The employee might sue for harassment under employment law, painting the event as part and parcel of the company’s employment practices and, indeed, under its control and direction, Silbergeld says.
Worse yet, in all likelihood the company’s general liability insurance would not cover such disputes, Silbergeld says. In fact, these days most ordinary general liability coverage explicitly excludes any claims under employment law.
The practical result: If you carry only general liability insurance and not employment practices liability insurance as well, you could find yourself in court defending a complaint against which you have no insurance coverage. Indeed, given the frequency with which general liability insurance policies exclude such disputes, you probably won’t have any coverage at all against the risk, Silbergeld says.
Employment-practices suits may involve not only claims of wrongful termination or sexual or racial harassment occurring during ordinary working hours but even offensive touching and speech of the sort that can happen at a holiday party, he says.
“There is a risk associated with serving alcoholic beverages at a company function, and the business insurance may exclude coverage for disputes with employees arising out of social events like holiday parties,” says Silbergeld.
“It’s not always the case that ordinary business liability insurance will apply.”
Silbergeld counsels his clients to take specific steps to avoid liability:
* Announce the party as a business function but make everyone aware that attendance is voluntary. The strategy may ensure that the employee bears responsibility for his or her actions, Silbergeld says. In addition, an employee injured during the party--for example, by falling while dancing--may qualify for compensation under workers’ comp law, not liability law.
* Invite spouses and children, whose presence may inhibit extreme behavior.
* Circulate your anti-harassment policies before the party, in particular those prohibiting offensive touching and inappropriate speech, and make sure that everyone understands they apply during the party.
* If possible, serve only nonalcoholic beverages.
* If you do serve liquor, don’t give people salty foods, which may encourage drinking.
* Hold your party at an establishment possessing a liquor license, since the courts generally hold such establishments free of liability for misdeeds of patrons.
* Make sure that only professional bartenders serve liquor and instruct them not to serve employees who become visibly drunk.
* Provide for security and arrange for free transportation or taxi vouchers for employees who drink.
“Inviting spouses and children helps to make it a social function,” Silbergeld says, “and you probably want to hold your party at a hotel or private club with an intimate atmosphere that contributes to the festivity of the event.”
Professional bartenders, he adds, can spot people who have had enough, and they alone should serve alcohol. An employer who does so personally or delegates the job to a staff member may face liability claims in case of accident or injury.
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Recent Financing and Insurance columns are available at https://www.latimes.com/finin. Juan Hovey can be reached at (805) 492-7909 or at jhovey@gte.net.
