Christmas is just around the corner, and you have been prepping for the annual office party for months. While a work-sponsored event presents an opportune time for celebrating year-end achievements and building team camaraderie, it also exposes your company to potential liability risks.

From intoxicated guests to accusations of sexual harassment, you’ll need to plan well ahead to avoid the common legal pitfalls that often arise during and after office parties. Understanding these liabilities and having the appropriate protocols in place will minimize the chances of your company paying the medical bills of an injured guest or dealing with worse outcomes long after the party is over.

Social Host Liability

Unfortunately, federal agencies like the Occupational Safety and Health Administration (OSHA) lack clear guidelines on employer responsibilities when it comes to intoxicated guests at employer-sponsored events. Many organizations fail to realize that they can be held liable for injuries caused by guests who drive drunk following an office party or event. Referred to as “social host liability,” state laws generally define social hosts as individuals or companies who supply or serve alcohol to guests at an event.

Some laws may hold companies liable under “Dram Shop” laws, which apply to commercial hosts that sell and distribute alcohol to patrons and customers. Under “Dram Shop” laws, bars, clubs and restaurants are prohibited from selling alcohol to minors (selling alcohol to minors is illegal in all 50 states) and are held responsible for alcohol-related injuries.

Some states have interpreted this law as placing a legal duty upon employers to exercise “reasonable care” when serving alcohol to employees and guests at office and employer-sponsored events. For example, if a guest becomes visibly intoxicated, it is the employer host’s responsibility to stop serving alcohol to that guest or to prevent them from driving home drunk. If reasonable care is not exercised, “Dram Shop” laws can hold the employer liable for negligence.

Other Liability Issues

Sexual Harassment

The presence of alcohol at an office party may lead some employees or guests to engage in inappropriate or lewd behavior. To ensure that your guests feel comfortable and safe, check whether your company’s HR policies specifically cover sexual harassment at employer-sponsored events.

If no such policies exist, consider asking your HR manager to amend their guidelines to include examples of unacceptable behavior at company functions. For example, employees should avoid cultural customs (e.g. hanging mistletoe) that can create romantic or sexually charged situations.

Workers’ Compensation Liability

While serving alcohol to employees and guests at an office event is an obvious risk for most companies, injuries to guests due to reasons unrelated to alcohol can also pose workers’ compensation liability issues. So if you are considering a physical activity (such as a company sports game), check your state laws on workers’ compensation for employees who are injured during or as a result of an employer-sponsored event. Though hosting the event off-site limits liability, you can still be held legally responsible if the venue provider does not have proper licensing or insurance coverage. For any potentially risky physical activities, consider having employees sign a work activity waiver.

Wage and Hour Employee Claims

Another lesser but relevant concern when throwing an office party is that a non-exempt employee may claim for pay or other compensation for functions performed at the event. Prior to the event, clearly communicate that the company party is for social purposes only and that employee attendance is voluntary. Moreover, unless it’s clearly written in their job description, avoid assigning employees tasks that could lead them to submit a claim for work performed outside normal business hours.

Minimizing Your Employer Liability

When hosting your next office party or event, be mindful of the following best practices to minimize your company’s liability risk and potential for being handed a future lawsuit.

  • If hosting your event outside the office, confirm that the venue provider has proper licensing and insurance
  • Communicate to employees before the event that your office party is separate from work or other business functions
  • Restrict your invite list to employees and guests you know
  • Review your company’s insurance policy to ensure you have comprehensive liability coverage
  • Stay alert and consider hiring security personnel to discreetly monitor and handle any alcohol-related incidents if necessary
  • Stop serving alcohol well before the party’s official end time
  • Don’t serve alcohol to guests who are visibly intoxicated
  • Organize event activities that exclude alcohol
  • As an alternative to a cash or open bar, substitute with refreshments such as food and non-alcoholic beverages