toasting drinks Photo by iStockphoto/4FR

As companies recover from the Great Recession, holiday parties are no longer in danger of becoming extinct. In 2012 the Society of Human Resource Management (SHRM) found that almost three-quarters of employers planned to hold a holiday event, compared to 60 percent doing so just two years before. Holiday parties can build morale and team spirit; they also can create legal liability disasters for employers. Here are three categories of disasters to beware of, and solutions to address them proactively.

Sexual Harassment Disasters

When alcohol is served at holiday parties, it can create an environment for unwanted sexual advances and potentially illegal employee conduct. It is not uncommon for some employees to forget their office behavior standards at company holiday parties, particularly those held outside of the workplace. In a social setting, an employee may feel more at ease in pursuing another employee in a personal, romantic manner. And with ubiquitous cellphone use combined with social media postings, the evidence of a sexual harassment incident can be posted online for the whole world to see. A starting point for dealing with the latter concern is to review the company social media policy and prohibit employees from posting photographs or video at an official company function without management permission.

This, however, does not address the broader issue legal liability from harassment. Employees are protected from sexual harassment and discrimination by Title VII of the Civil Rights Act of 1964, which covers employers having 15 or more employees. Title VII provides two requirements for conduct to trigger liability for unlawful harassment: (1) the conduct must be unwelcome; and (2) the conduct must be sufficiently severe or pervasive that it violates the law.

Conduct is not illegal simply because it is inappropriate or makes someone feel uncomfortable. To violate Title VII, the conduct at issue must be severe or pervasive; it need not be both. Even a single, extremely serious incident of harassment may be sufficient to constitute a Title VII violation, especially if the harassment is physical. So, if the office party incident follows previous incidents of misconduct, it could constitute the evidence necessary to reach the “severe” or “pervasive” threshold, or at least create an issue for trial. Given this risk, employers should have in place comprehensive, written anti-harassment policies, clearly spelled out in employee handbooks—and re-circulate copies of these policies prior to the party. Also, send a memo reminding employees to act responsibly at the party, clearly expressing a lack of tolerance for inappropriate behavior. Courts have ruled that employers who make prompt and appropriate response to employee complaints can limit liability for sexual harassment by their employees.

Personnel Policy Disasters

Human resource issues that frequently arise at year-end can create the potential for conflict or confrontation at holiday parties from disgruntled employees if there is no proactive planning for situations that can arise. If this produces physical confrontation or violence, the employer faces legal liability. Be alert to the implications of these situations:

  • Year-end bonuses may create the temptation for employees at holiday parties to compare notes on who got what and how much. It is against federal law to prohibit employees from discussing wages, but a reminder about professional confidentiality when a bonus is given may be helpful.
  • As the fiscal year ends, companies can find it necessary to make budget cuts and, unfortunately, layoffs. There is never a good time to tell someone they are being terminated, but it can be even harder around the holidays, particularly if employees otherwise expected to attend a holiday function. They may show up anyway, even if terminated, and create disruption. Any severance announcement to an employee should specify the terms under which their company access is ended, and security should be present at the holiday function to screen and intercept potentially hostile terminated employees.
  • The year-end holidays are a time of religious observance for Christians and Jews, and some such persons may openly resent and criticize a holiday function that lacks religious overtones. Similarly, many people who do not have religious affiliation can resent religious displays at such a function. Courts have held that wreaths and Christmas trees are considered “secular” symbols and can be displayed even if persons object. Remember, however, that Title VII of the Civil Rights Act requires an employer to reasonably accommodate an employee’s religious observances, practices and beliefs, as long as it can do so without undue hardship on the employer’s business operations—including at a holiday party.
  • The holidays are the hardest time of the year for persons with depression or other mental illnesses, and such individuals may try to attend a holiday party, with disastrous results. Be sure to remind employees that the company has an employee assistance program available for individuals who are stressed out because of the holidays or just need someone to talk to.

Accident Liability Disasters

In a 2013 decision, a California appellate court reversed the trial court’s grant of summary judgment for the employer and found that an employee who consumed alcohol at a company-sponsored event and, after leaving, struck another car and killed the driver created liability for the employer. “It is irrelevant that foreseeable effects of the employee’s negligent conduct (here, the car accident) occurred at a time the employee was no longer acting within the scope of his or her employment,” the court ruled. Given this significant liability potential, employers should take these proactive steps to keep alcohol from contributing to traffic accident disasters:

  • If alcohol is served, keep consumption in check. Limiting access to alcohol by placing restrictions on the type served, the time available (such as by closing the bar well before the party ends), or the number of drinks served (such as through drink tickets) to prevent excessive drinking. Providing food typically slows the absorption of alcohol into the bloodstream, and providing plenty of non-alcoholic beverages is always a wise choice.
  • Hire professional bartenders and require IDs from guests who do not appear to be 21 years of age or older. Ask the bartenders to keep their eyes open for obviously intoxicated employees.
  • Arrange designated drivers or cabs to ensure that all persons have a safe way to get home. Consider offering incentives to employees who offer to be designated drivers and/or pre-paid cab vouchers to employees.
  • Invite to the holiday party spouses, significant others, families and important clients with whom the company conducts business, which can keep the atmosphere of a company party more disciplined and discourage inappropriate behavior.

The bottom line, no matter what the potential disaster, is that effective, proactive steps, if properly planned and implemented, can be extremely valuable in defending an employer against holiday party problems and legal complaints.

David L. Barron is a member in the Houston office of the national law firm Cozen O’Connor, focusing his litigation practice on labor and employment law.