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It is the holiday season, a time for office parties and charity events. While gatherings can provide opportunities for professionals to mingle casually with their co-workers and clients and can help boost employee morale, they can also prove to be a liability for businesses that serve alcohol. The United States Department of Labor states that holding an office holiday party with improper use of alcohol can make employers vulnerable to liability under tort, workers’ compensation, or other laws. That is why businesses should take reasonable precautions to prevent any risks and financially protect themselves by making sure they have the proper insurance.
Forty-four states have enacted liquor liability laws. These laws make it possible for a plaintiff to hold those who serve alcohol to an intoxicated or underage person responsible for any damage or injury caused by these same individuals after they leave the party. Most of these laws also offer an injured person, such as the victim of a drunk driver, a method to sue the person who served the alcohol. There are circumstances under these same state laws where criminal charges may also apply.
Liquor liability laws were intended originally to apply to taverns, bars, and other establishments selling and serving alcohol. However, the liability laws have expanded over time to include “social hosts” (such as those holding a holiday party in their home or business) in some states giving them some exposure to the risk of liability for serving alcohol.
When business owners host a holiday party and serve alcohol as part of the festivities, liquor liability can be covered by their commercial general liability (CGL) policy. However, it is always best to check with your insurance agent or broker first.
In addition to a CGL policy, businesses should also consider purchasing an Employment Practices Liability Insurance (EPLI) policy. An EPLI policy will protect a business from discrimination, sexual harassment, emotional distress, and other workplace-related issues. When you buy the coverage, make sure it includes “third-party” coverage. Third-party coverage refers to claims made by non-employees, usually clients or customers, who allege that an employee engaged in wrongful conduct such as sexual harassment or discrimination. This can be important coverage, for example, if someone in management has had too much to drink and makes an inappropriate overture to a client or customer. Without a specific policy endorsement for third-party claims, EPLI policy forms do not cover these types of exposures. In addition to overtly inappropriate behavior, if someone puts a video clip or picture on YouTube or Facebook that could result in reputational harm, it is also covered under an EPL policy.
How to Protect Your Business
How do you ensure that you don’t get hit with a workplace lawsuit after an office holiday party? The following tips may help to prevent a lawsuit:
- Advise employees to be responsible. Include a statement on the party invitation and/or circulate a written reminder to all concerned on the responsibilities to drink only in moderation and to avoid driving after drinking.
- Emphasize to management that they must lead by example.
- Hold the party at an offsite location. If problems do arise, it is better that they occur away from the business premises. Depending on the state, the liability will generally be on the restaurant than the company. However, it is not unusual for an employer to be named as a defendant in a civil lawsuit if an intoxicated employee leaves any company-sponsored event and injures himself or herself or another person as a result.
- Do not pay for alcoholic drinks. Guest will drink less if they have to pay for the drinks themselves.
- If you feel you must furnish alcoholic beverages, consider a drink voucher system to limit the number of drinks served. Or, serve alcohol for only a short period.
- Consider hiring a professional bartender. Most bartenders are trained to recognize signs of intoxication and will limit consumption by partygoers.
- Offer non-alcoholic beverages and always serve food. It is proven that food can help counter the effects of alcohol.
- Do not serve alcohol to minors.
- Stop serving liquor toward the end of the evening and switch to coffee, tea and soft drinks.
- Arrange alternative transportation. Anticipate the need for alternative transportation for all employees and guests and make special transportation arrangements in advance of the party. Encourage all employees and guests to make use of the alternative transportation if they consume any alcohol.
Business owners should talk with their insurance advisor about their liability insurance coverage and any exclusions, conditions, or limitations to their policies for this kind of risk. Appropriate liability insurance coverage is necessary. In some cases special event coverage may be available that will cover both liquor liability and other liability exposures specific to the event.
John Keller, CRM ARM CIC AAI is the Director of Risk Management and Claims at Gulfshore Insurance. John works with a wide range of business clients to deliver strategic risk analysis and guidance. Comments and questions are welcome at firstname.lastname@example.org
Gulfshore Insurance is a Naples, Florida based insurance agency specializing in business insurance including liability insurance, property insurance, workers compensation insurance, vehicle insurance, business income interruption insurance, cyber insurance, commercial umbrella insurance, and more. Our insurance and risk management advisors are industry specialists for condominium associations, golf and country clubs, oil and petroleum marketers, construction, landscaping, churches and non-profits, and work comp. Navigating insurance requires an experienced and trusted insurance agent who understands your business risks and exposures. Gulfshore Insurance services Naples, North Naples, Marco Island, Bonita Springs, Fort Myers, Sarasota, Lido Beach, Longboat Key, Bradenton Beach, and Southwest Florida. We have office locations in Naples, Fort Myers, Fort Lauderdale, and Sarasota.
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