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RISK MANAGEMENT

Manage your law office’s holiday party liability risks

You may be hosting a big holiday party for your employees this December. And, like many law offices do, you may be serving liquor at that party. That’s fine. Just make sure you understand what you’re getting yourself into.

Relax. We’re not going to lecture you on the dangers of drinking and driving. No sense preaching to the choir. But what we can do to help you out is explain the liability risks employers incur when they serve alcohol to their employees, not just during the holiday season but at any time of the year.

The law of host liability

Not all offices recognize that they can be liable for injuries caused by employees who drive drunk after an office party (or another event your office sponsors). Even law offices that do know that risk exists don’t fully understand the exact nature of those risks and how to manage them.

What the law says: Persons who serve alcohol to guests can be liable for negligence if the guests get drunk and cause injuries to themselves or others. This is called “host liability” and it extends to employers who furnish alcohol to their employees. Where does this law come from? And what does it mean? Let’s answer these questions one at a time.

Employer host liability for the drunk driving of employees comes not from federal legislation but state law. Social host liability may be based on “dram shop” laws, i.e., state statutes that prohibit the sale of alcohol to minors and hold distributors responsible for alcohol-related injuries. For the most part, these laws only apply to companies that are in the business of selling alcohol, such as bars or restaurants. But some states have interpreted the law as imposing a legal duty upon social hosts (including employers) to exercise reasonable care when serving alcohol to their guests. In these states, courts have held employers liable for serving alcohol to a minor or an employee who became intoxicated and injured himself or someone else.

But the principle source of social host liability is common law, in other words, court cases. It’s the crystallization of decades of negligence lawsuits by victims of drunk drivers against the hosts that served those drivers.

The earliest targets of such lawsuits were tavern owners. But over time, victims began suing individuals who hosted guests in their home. Suing employers for serving alcohol to employees at company social gatherings was the next phase in the evolution of host liability.

Employer pays almost $1 million after drunk employee kills child

A major case occurred in 1992, when an employer was held liable after an employee got drunk at a professional trade meeting attended by other company employees. As he was driving home, the employee ran a stop sign and crashed into another car, killing the driver’s son.

The employee had had several drinks with the company’s president and other employees, all of which were deducted as business expenses. Everyone watched as the employee left the bar, slurring his words. But nobody stopped him. The jury ordered the employer to pay $80,000 to compensate the victim’s father and another $800,000 for punitive damages.

On appeal, the Florida court upheld the verdict because the employer:

  • Told employees to attend the meeting to benefit the business;
  • Paid for all meeting expenses, including drinks;
  • Reimbursed travel expenses to and from the meeting;
  • Encouraged employees to entertain clients and buy them drinks at these types of meetings; and
  • Let the employee leave by himself, despite evidence that he was too drunk to drive.

Holding the employer responsible for the employee’s drunken conduct might seem unfair. After all, the employee was a responsible adult capable of making his own decisions. But the court in this case said that the employer should be responsible because it had more control over the actions of its employees than other kinds of hosts typically have over their guests [Carroll Air Systems, Inc. v. Greenbaum, 629 So. 2d 914 (Fla. App. 1992)].

As the Carroll case shows, employers are especially vulnerable when they require their workers to attend a function or drink with clients. In 2002, the Supreme Court of Texas said that an employer who required employees to drink with clients could be responsible for injuries resulting from the employees’ intoxication. In that case, an exotic dance club required dancers to drink with the club’s clients to boost their bar tabs [D. Houston, Inc. v. Love, 92 S.W.3d 450 (Tex. 2002)].

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3 ways to avoid liability

The key to avoiding host liability when serving alcohol to guests is to exercise your responsibilities as a host. In a nutshell, you must keep drunken guests from driving or not let them get drunk in the first place. What you can’t do is let guests drink themselves into intoxication and then turn them loose on the public.

There are three tactics you can use to carry out this social host responsibility strategy:

1. Monitor alcohol consumption

Keep track of how many drinks each of your guests has. This will be much simpler if you have a closed, supervised bar.

What to do: Before the party, designate one or more persons as drinks monitors. Bartenders who are trained to keep tabs on how many drinks individuals consume make for ideal monitors. But you can also use your own employees as long as they don’t drink during the party—monitors need to be sober to do their job.

Issuing drink tickets to each guest also enables you to not only track but control consumption. The problem with tickets is that guests who don’t drink give their tickets to guests who do. So cash bars might give you more control than tickets.

2. Determine whether guests are intoxicated

The second thing a host must do is try to figure out if a guest is intoxicated. We’re not talking blood testing and breathalyzers. According to court decisions, you need only make “reasonable assumptions” about whether guests are impaired based on how many drinks they’ve had.

What to do: The monitor who keeps track of drinks consumed should also make the call on intoxication. One way you can help monitors make sound judgments is by making sure they understand what “intoxication” means. Just use the legal limits for impaired driving. In most states and provinces, individuals can be charged with a crime if they drive with a Blood Alcohol Content (BAC) over .08% or .10%.

But this is where things get tricky. To make “reasonable assumptions” about intoxication, monitors must estimate a guest’s BAC level by observing how many drinks he’s had. That’s asking a lot, especially when you consider that individuals get impaired at different rates. It depends not just on the number of drinks they’ve had but on their gender and weight (among other things).

To help you overcome these problems, there’s a briefing paper below that shows monitors how to identify impairment based on drinks consumed, gender, and body weight. The briefing is based on data from the U.S. Department of Health. And while it’s not 100% precise, it should enable your monitors to make the “reasonable assumptions” required by the negligence law.

3. Prevent intoxicated guests from driving

If you know or have reasonable grounds to suspect that a guest is impaired, you must make an effort to prevent him from getting behind the wheel. This is fine when the guest cooperates. But what happens if he puts up a fight? How far must you go to keep an intoxicated guest from driving?

In the Houston case cited above, the dancer’s manager asked if she was okay to drive home. But the court said that wasn’t enough. The employer should have gone further, by taking her keys, calling a cab, or making her stay put until she sobered up.

What to do: Use incentives such as appointing designated drivers, giving out taxi vouchers and even reserving hotel rooms where drunk guests can go to “sleep it off.” But be prepared to use the stick, too, including:

  • Adopting a zero tolerance policy for drinking and driving;
  • Sending employees a note a day or two before the party reminding them that they should behave responsibly during the event;
  • Collecting the names and phone numbers of employees’ spouses or, if they’re unmarried, other persons who can pick them up if they get drunk;
  • Making employees and guests turn in their car keys if they plan to drink;
  • Appointing a monitor to watch the parking lot in case an intoxicated guest tries to sneak out;
  • If necessary, disciplining intoxicated employees who don’t cooperate; and
  • If all else fails, calling the police.

Don’t put too much stock in waivers

One of the things employers do to try to limit their liability is have employees sign a waiver promising not to hold the company responsible if they get drunk at the party and get hurt driving home. Such a waiver isn’t worth much. Courts aren’t likely to enforce them, especially if employees sign them after they start drinking. “The alcohol washes away the worker’s capacity to enter into a binding waiver,” explains one attorney. Moreover, the waiver doesn’t bind third parties that the employee might injure.

Conclusion

Of course, there’s a much simpler way to manage host liability risks: Don’t serve alcohol at your holiday party (or at picnics or other law office affairs during the year). In this context, keeping the party dry isn’t a moral decision but purely a legal one. Your office has every right to make the decision to serve alcohol. But, as the manager, you should ensure that the decision-makers understand the legal risks the firm assumes when it exercises that right and that it takes the appropriate steps to manage those risks


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