Many businesses host parties for their employees to celebrate the seasonal holidays or organizational accomplishments. While a party should promote camaraderie and be a fun reward for your employees, employers need to know that they can be held liable for property damage, accidents and injuries caused by employees who overindulge with alcohol at the party. 

Before hosting a party, it's a good idea to talk with your HUB International broker about your employment liability insurance coverage and any limitations you might have, such as if your policy covers third-party liquor liability. Planning ahead for potential issues can save your company both headaches and dollars.

The most common problems an employer can be held liable for at a company-sponsored party are often related to intoxication and harassment:

Don't be over-served 

An increasing number of states require employers to exercise caution to prevent injuries caused by intoxicated employees leaving holiday parties. To avoid many of these liability issues, an employer should make an effort to lessen the role that alcohol will play during the festivities:

  • Host your party at a hotel, restaurant or bar with a liquor license, rather than at your office. That way you transfer the obligation to the provider of the liquor. The venue you choose may require a certificate of insurance. You may want to consider a special event policy to address the added risk.   
  • Use professional bartenders and instruct them not to serve anyone who appears intoxicated. Do not serve alcohol to any employees under the age of 21.
  • Ask management to be on the lookout for people who have had too much to drink and are unable to drive or need assistance getting home.
  • Actively manage the amount of alcohol being served. Examples include:
    • Distribute drink tickets to limit the number of free drinks.
    • Offer non-alcoholic options such as coffee, hot chocolate, juice, soda, tea, sports drinks and water. 
    • Serve food throughout the party to keep guests full and help reduce their alcohol intake.
    • Close the bar and stop serving drinks 90 minutes before the end of the party.
    • Have the party in the afternoon, instead of the evening.
  • Make sure employees have alternative transportation options available, such as a designated driver, shuttles or other forms of public transportation.
  • Remind employees via email about your company's code of conduct and substance abuse policy prior to the party.

You may also opt to host a group outing or a volunteer activity rather than a party so the focus will be on an activity other than drinking.  

Reinforce appropriate behavior 

A festive atmosphere, socializing and alcohol can combine to create an environment that can lead to sexual harassment claims. Harassment suits can result from voluntary events held outside of the office and outside of normal working hours. 

  • Remind and reinforce the company's harassment policies prior to the party.  Emphasize the company has a zero tolerance policy for any sort of harassment, including both physical and verbal forms. 
  • Inform employees that they should report any harassment they experience or witness.  Create an environment in which employees are comfortable coming forward with such information.
  • Do not hang mistletoe.
  • Make sure your employees understand that a holiday party is still a work-related activity and appropriate work behavior is still required.

With all the goodwill and celebration of the holiday season, it can be easy to forget to take the necessary precautions to protect both your employees and your business. The goal of a company holiday party should be to keep the celebrations safe and fun. It is also important to make sure the party is voluntary. If employees do not want to attend, don't mandate it.

Following these tips will keep employees out of harm's way, limit holiday party liability and make sure everyone has a good time.