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Company Social Functions: What Are Your Risks?

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As an employer, you want to reward your employees with the occasional party. When you do make these arrangements, you need to be aware of liability issues that may arise. Even when your employees aren't technically working, the company can be held responsible for certain problems. 


If you are serving alcohol at your party, you need to carefully monitor the state of your employees. In some instances, courts have held employers liable for negligence when their intoxicated employees left a party and caused a car accident. In reality, you would be better off not serving alcohol at company functions to avoid potential lawsuits. This policy might not be popular with employees, but it will protect the company.

Sexual Harassment

When people are in a party mood, they may relax their usual business standards. A festive mood combined with alcohol can mean that normally well-behaved employees may not only flirt with coworkers but cross over into harassment. Sexually explicit comments or even inappropriate touching can result, leading to trauma for some employees and possible litigation for you. Experts recommend that you remind all employees of the company policies on this issue shortly before the party. Also remind supervisors to be vigilant about employee behavior during the party. 


If an employee is injured at a company party, they may have a valid worker's compensation claim. If employees are required to attend a function as part of their job, then a slip on the dance floor can lead to such a claim. Even if party attendance isn't required, you may be liable if the party is used to give out compensation. For instance, if you routinely award the yearly bonus at the party, any injuries that occur there may be considered the company's liability. In the case of worker's compensation, even a fun activity can lead to a claim against the company. To avoid these issues, appoint someone to check the party room or area for possible hazards before the festivities begin. You cannot eliminate all risks, but you can take care of the obvious ones, such as a slick floor or unstable chairs. 

As an employer, you certainly want to reward your employees with an occasional party. To prevent liability issues, you do need to be careful with alcohol, behavior standards, and facility safety. You do not have to do away with entertainment, but you do need to exercise caution so that the company party does not become the company headache. It may also be a good idea to take a second look at your workmans compensation insurance policy to see what out-of-office events are covered.