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Despite the risks, more employers holding holiday parties

Despite the risks, more employers holding holiday parties

Employer-hosted holiday parties are on the upswing and businesses are spending more money on the festivities than they have in recent years, surveys show.

But despite steps employers have been taking for years to mitigate the risks associated with such galas, issues such as drunkenness and unprofessional behavior continue to be as common as an olive in a martini.

According to a survey of 400 human resources professionals conducted by Vault Inc., a New York-based career information company, 66% percent of companies are sponsoring holiday parties this year, up from 55% in 2003.

In a separate annual survey, the Washington-based Bureau of National Affairs found that median holiday party spending this year is $7,000, up from $5,000 in 2005. It is the highest employer holiday party spending since the BNA's survey began 12 years ago.

Meanwhile, not much has changed when it comes to the risks employers face in hosting such events, despite the now-common practice of educating employees on appropriate workplace behavior and taking steps to mitigate liabilities that arise when an employee has too much to drink or gets too comfortable around colleagues, workforce attorneys say.

"It seems to me that while there is a greater awareness now than there has ever been regarding alcohol, sexual harassment and inappropriate behavior, there continue to be issues that arise out of business-related social events," said William J. Milani, a New York-based attorney with Epstein, Becker & Green P.C.

Mr. Milani and other attorneys say calls to their firms this time of year regarding an incident at a holiday party are common.

"One can just imagine all the problems associated with these things," said Jim Salzman, a partner with Matkov Salzman Madoff & Gunn, a Chicago law firm that handles employment-related issues. "It's incredible how people that are very conservative and very aware of employment and liability issues seem to leave those concerns at the door when holiday parties arrive."

For some time, Mr. Salzman said, the trend has been for employers to forgo the festivities or replace nightly events with tamer luncheons, mostly to protect their companies from liability issues that an employer faces when an intoxicated employee drives home afterwards and gets in an accident or when an employee makes disparaging comments that could be grounds for sexual harassment and other complaints.

Often, alcohol and inappropriate behavior go hand-in-hand, Mr. Salzman said.

Michael Liebowitz, director of insurance and risk management for New York University and president of the New York-based Risk & Insurance Management Society Inc., said there's a simple way to remove much of the risk: Serve no alcohol.

In fact, the U.S. Department of Labor advises companies not to serve alcohol at holiday parties, mostly to avoid drunken driving and other incidents.

But that approach is not altogether realistic, Mr. Liebowitz said. "It is the holiday season and everyone wants to have a good time," he said.

Vault's recent survey also asked 400 nonmanagement employees about their holiday party expectations, and 37% listed an open bar as "essential."

The next-best practice, Mr. Liebowitz said, is to limit the offerings to beer and wine, which may not be as risky as serving stronger liquor. Other strategies include providing employees with drink tickets to limit the amount of alcohol they consume and providing clear guidelines for employee behavior at holiday parties.

"You can try to reinforce to employees and keep the party as festive and light as possible, with a degree of professionalism," Mr. Liebowitz said.

While trying to maintain professionalism at workplace parties remains a top issue, so is ensuring that intoxicated employees do not drive home, said Dave Dietsch, a Kansas City, Mo.-based claim manager for broker Lockton Inc.

Many businesses have adopted the practice of appointing designated drivers, hiring limousines or, as Lockton has done, issue complimentary "(taxi)cab cards" to employees during the holiday season.

Even so, the risks of an employee driving away drunk are still present.

Standard commercial general liability policies cover liquor liability associated with workplace functions, as long as the policyholder is not in the business of "manufacturing, selling, distributing, serving or furnishing alcoholic beverages," Mr. Dietsch said. Businesses such as bars and restaurants need to buy separate policies to cover such risk.

And if a company decides to hold its party outside its main offices, the liability doesn't end, Mr. Liebowitz warned.

"The last thing we tell employers and managers is that their responsibility (to their employees) doesn't end until their employee walks through the door of their home," he said.