It’s a familiar story, a common event…Picture This!

It’s December 2009 and you’re in sunny San Diego, California. As the end of the year approaches, you decide to get into the holiday spirit by hosting a Holiday Party for your employees.  You of course intend to serve alcohol. After all, you want to keep things festive.

With much preparation and planning, it’s now party time. But unbeknownst to you, events are about to quickly spiral out of control.

One of your employees (let’s call him Michael), engages in some pre-celebratory libation at home before he arrives at the party. Michael remembered that there would be a two drink minimum of beer and wine at the party, so he smuggled in a flask full of whiskey. One of your managers bartending the event, obliges Michael with a refill of his flask once it becomes empty. This was on top of the whiskey shots Michael also consumed. Needless to say, Michael is “drunk as a skunk.”

Michael leaves the party with co-workers, and does not remember if he drove home.  Once home, he did not drink anymore.  However, after about 20 minutes, he decides to drive a drunken co-worker home.  On the trip, he speeds at more than 100 miles per hour and strikes a vehicle driven by a young doctor, killing him. It was determined that Michael’s blood alcohol level at the time of the accident was .16, twice the .08 limit in California.

The Aftermath

Michael pleads guilty to gross vehicular manslaughter while under the influence and receives a six-year prison term.

Although you are deeply saddened by the sequence of events, it never crosses your mind that your company could be subject to civil liability for Michael’s actions until you receive the wrongful death lawsuit from the doctor’s parents naming Michael and your company as defendants.

Your lawyers request summary judgment dismissing your company from the case on the grounds that your company, as a matter of law, could not be held liable because Michael had not been acting within the scope of employment at the time of the accident for the following reasons:

  • Attendance at the party was voluntary.
  • The party was not “work.”
  • Even if the party was considered within the scope of employment, once Michael was home, he was no longer within that scope of employment.
  • Michael’s subsequent travel was unrelated to work.

The trial court grants the summary judgment. Plaintiffs, however, appeal and the summary judgment is REVERSED.

The Court of Appeal finds that the holiday party itself was work-related, since your company derived the benefit of increased employee morale. They conclude that a reasonable trier of fact could find that your company permitted the consumption of alcohol — including the whiskey brought to the party by Michael — and that the party and the drinking of alcoholic beverages both benefitted your company (by improving employee morale and furthering employer-employee relations) and were a customary incident of the employment relationship (based on your company’s approval of alcohol consumption at this and prior employee parties).

This scenario, which actually occurred in Purton v. Marriott Int’l, Inc. (2013) 218 Cal. App. 4th 499, makes clear that a California employer bears vicarious liability for the foreseeable acts of its intoxicated employees if the alcohol consumption (1) occurred with the employer’s express or implied permission, and (2) was “conceivably of some benefit to the employer” or was a “customary incident of the employment relationship.” The decision also makes clear that the employer’s potential liability does not terminate when the employee reaches home, but “continues until the risk that was created within the scope of the employee’s employment dissipates.”

It should be noted that the court’s decision did not impose vicarious liability on Marriott, but merely rejected the trial court’s ruling that such liability could not occur as a matter of law. It still remains for the trier-of-fact to determine whether the Marriott employee’s intoxication occurred within the scope of his employment, whether the intoxication was the proximate cause of the accident, and whether the employee’s act of leaving his residence to drive his intoxicated coworker home was so unusual as to render the resulting accident unforeseeable.

Party Planning for the Future

While there is no way to completely insulate your company from liability arising out of employer-sponsored holiday parties, below are some suggestions for minimizing the risks related to holiday parties:

  1. Send a memo to employees before the holidays reminding them that the company’s dress and behavior codes – and harassment policies – apply to off-site, after hours, company-sponsored events.
  2. Make sure that holiday parties are voluntary in nature so that those who choose to abstain from celebrating for religious or cultural reasons are not made uncomfortable.
  3. Invite spouses and significant others so that there will be someone there to help keep an eye on your employees and, if necessary, get them home safely.
  4. Have the party off-site at a professionally managed facility. Use professional bartenders who know how to respond to guests consuming alcohol in excess. Instruct them to report anyone who they think has had too much to drink. Also ensure that bartenders require positive identification from guests who do not appear to be substantially over 21 years of age.
  5. If it is not realistic to ban alcohol completely from the festivities, consider creating a drink ticket system so as to limit employees’ alcohol consumption, and do not have an “open bar.”
  6. Be sure to serve food at the party.
  7. Limit the length of the party and close the bar one hour before the end of the party. Switch to coffee and soft drinks from there on.
  8. To make sure employees get home safely, offer transportation options like taxi vouchers, at no cost to employees who may not be able to drive safely, and advertise these options prominently at the event and in all event reminders.
  9. Consider excluding religious symbolism from decorations and entertainment.  The laws prohibiting discrimination do not require employers to avoid trees or wreaths, but the decorations on them should be secular.
  10. Never, never, hang mistletoe!  Consumption of alcohol lowers inhibitions, and impairs judgment.  This can result in employees saying and doing things that they would not ordinarily do.

While the risk of inebriated employees cannot be completely eliminated, these suggestions may help reduce liability related to employee behavior while still affording you a way to maintain holiday party traditions and avoid bringing in the New Year with an unwanted lawsuit.

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