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Holidays can bring legal problems for businesses

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[November 18, 2011]  NEW YORK (AP) -- A holiday party can be a great opportunity for employees and clients of a small business to relax and get to know each other better. It can also land the company in legal trouble.

The source of the problem is usually alcohol. A staffer or client or other guest has too much to drink and starts groping or making unwanted advances to an employee. Or someone has a car accident or falls down on the way home. A company can be held legally liable for damages in each case.

A big part of the planning for the party should be about preventing such problems.


Some states have laws that make the host of a party liable if they serve alcohol and guests are involved in an accident or cause property damage. These laws are known as dram shop or liquor liability laws. They were originally aimed at bars, restaurants and liquor stores, but courts have increasingly held party hosts, including companies, responsible in these situations. That means that if one or more of your employees or guests has too much to drink and there's an injury or damage, you may have to pay.

Before the party, you should check your insurance coverage and be sure that your business policy will cover you. Loretta Worters, a vice president of the Insurance Information Institute, says liquor liability is most likely covered by a commercial general liability policy. But, she says, if an employee or guest who is drunk assaults someone, your policy probably won't cover you. Nor is it likely to cover you if there's sexual harassment at the party.

Some companies purchase what's called event insurance for added protection. Again, check with your insurance broker or carrier and see if you need the extra coverage.

Be aware that workers compensation is probably not going to cover you if an employee is injured during a party, whether or not alcohol is involved. But liability insurance may cover the injury.


Employees need to know long before the first drink is poured that this isn't just a party. It's a company-sponsored event and they and their guests are expected to behave with decorum, much as they're expected to behave in the workplace. Owners should send memos to the staff letting them know what's expected of them, says Rick Gibbs, a senior human resources specialist with Insperity, a Houston-based HR provider. They also need to know that what happens at the party can affect their standing with the company. And it doesn't have to be something that gets the company into legal trouble -- obnoxious behavior isn't OK at a party.

"Those things tend to hang on and back into the regular workplace after the party is over," Gibbs says.

If your company is large enough that you have supervisors, they need to know that they'll be working at the party, keeping an eye on all the guests to be sure there are no problems.

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The tone of the party, and how much drinking goes on, can be determined by the kind of affair you have, and where you have it. If you all get together in a bar, the message is, drink. If you have a party in an event space or even your offices and there's an open bar, you'll be giving a similar message. A sit-down lunch in a restaurant will be a more sedate, and safe, affair.

Here's a good rule of thumb from Gibbs: The more alcohol you serve, the more it increases the chances that something will happen.

Some companies have alcohol-free parties just to be sure that no one is hurt in any way. Or they serve alcohol only for the first hour of a party.

Others limit the amount of alcohol by offering only wine and beer, which take longer for people to drink than shots of liquor. Still, there are people who can put away a lot of wine and beer over the course of a three-hour party.

Another option is to have a bartender who knows when to cut people off. The Insurance Information Institute notes that professional bartenders are trained to spot even the early signs of intoxication. Again, not fool-proof, since some people tend to already be drunk when they're told: no more.

Some companies issue drink tickets to each employee and guest. The problem there is if someone starts collecting tickets that other people don't plan to use.

Still, there are things you can do. Don't have waiters circulating among the guests handing out champagne. Have only one bar.

And arrange in advance for limos, taxis and designated drivers to get people home. Even if they're not obviously drunk, someone who has had a few drinks probably shouldn't be driving or walking home on their own.

[Associated Press; By JOYCE M. ROSENBERG]

Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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